Mid Continent Steel & Wire, Inc. v. United States

Slip Op. 17-31
UNITED STATES COURT OF INTERNATIONAL TRADE
MID CONTINENT STEEL & WIRE, INC. ET AL.,
Plaintiff and Consolidated Plaintiffs,
v.
UNITED STATES,
Defendant,
and
PT ENTERPRISE INC. ET AL.,
Defendant-Intervenors and
Consolidated Defendant-Intervenor.
Before: Claire R. Kelly, Judge
Court No. 15-00213
PUBLIC VERSION
AMENDED OPINION
[Sustaining in part and remanding in part the U.S. Department of Commerce’s final
determination in the investigation of the antidumping duty order covering certain steel
nails from Taiwan.]
Dated: March 23, 2017
Adam Henry Gordon and Ping Gong, The Bristol Group PLLC of Washington, DC, argued
for Plaintiff and Defendant-Intervenor Mid Continent Steel & Wire, Inc.
Andrew Thomas Schutz, Max F. Schutzman, and Ned Herman Marshak, Grunfeld
Desiderio Lebowitz Silverman & Klestadt LLP of Washington, DC, and New York, NY,
argued for Consolidated Plaintiffs and Defendant-Intervenors PT Enterprise Inc., Pro-
Team Coil Nail Enterprise Inc., Unicatch Industrial Co., Ltd., WTA International Co., Ltd.,
Zon Mon Co., Ltd., Hor Liang Industrial Corporation, President Industrial Inc., Liang
Chyuan Industrial Co., Ltd. With them on the brief was Bruce M. Mitchell.
Mikki Cottet, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for Defendant. With her on the brief
were Benjamin C. Mizer, Principal Deputy Attorney General, Jeanne E. Davidson,
Director, and Patricia M. McCarthy, Assistant Director. 	Of counsel on the brief was
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 1 of 45

Court No. 15-00213 	Page 2
PUBLIC VERSION
Zachary Scott Simmons, Attorney, Office of the Chief Counsel for Trade Enforcement and
Compliance, U.S. Department of Commerce of Washington, DC.
Kelly, Judge: 	This consolidated action comes before the court on motions for
judgment on the agency record pursuant to USCIT Rule 56.2. 	Rule 56.2 Mot. for J.
Agency R. Pl. Mid Continent Steel & Wire, Inc., Feb. 26, 2016, ECF No. 28 (“Mid
Continent Mot.”); PT Pls.’ Rule 56.2 Mot. J. Agency R., Feb. 26, 2016, ECF No. 30 (“PT
Mot.”). 	Plaintiff Mid Continent Steel & Wire, Inc. (“Mid Continent”) and Consolidated
Plaintiffs PT Enterprise Inc. et al. (“PT”) challenge various aspects of the Department of
Commerce’s (“Department” or “Commerce”) final determination in the antidumping duty
(“ADD”) investigation of imports of certain steel nails from Taiwan for the period April 1,
2013 through March 31, 2014. Br. Support Rule 56.2 Mot. J. Agency R. Pl. Mid Continent
Steel & Wire, Inc. Confidential Version 17–42, Feb. 26, 2016, ECF No. 27-1 (“Mid
Continent Br.”); Br. Support Pls.’ Rule 56.2 Mot. J. Agency R. Confidential Version 8–45,
Feb. 26, 2016, ECF No. 29 (“PT Br.”); see Certain Steel Nails from Taiwan: Final
Determination of Sales at Less Than Fair Value, 80 Fed. Reg. 28,959 (Dep’t Commerce
May 20, 2015) (final determination of sales at less than fair value) (“Final Results”);
Certain Steel Nails From the Republic of Korea, Malaysia, the Sultanate of Oman,
Taiwan, and the Socialist Republic of Vietnam: Antidumping Duty Orders, 80 Fed. Reg.
39,994 (July 13, 2015) (“Order”).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 2 of 45

Court No. 15-00213 	Page 3
PUBLIC VERSION
Mid Continent commenced this action pursuant to section 516A of the Tariff Act of
1930, as amended, 19 U.S.C. § 1516a (2012). 1 Summons, Aug. 8, 2015, ECF No. 1; see
Compl., Sept. 4, 2015, ECF No. 9. Mid Continent challenges Commerce’s determination
that PT’s affiliated producer Pro-Team Coil Nail Enterprise Inc. (“Pro-Team”) is not
affiliated with [[ 	]] of the [[ 	]] tolling companies that do production activities for Pro-
Team. 2 	Mid Continent Br. 17–41. 	PT challenges: (1) several aspects of Commerce’s
application of its differential pricing analysis as unreasonable and contrary to law, PT Br.
8–35; 	(2) 	Commerce’s 	treatment 	of 	Pro-Team’s 	costs/expenses 	relating 	to
production/sales of steam as not supported by substantial evidence, id. at 35–42; and (3)
Commerce’s decision to adjust transfer prices paid for wire drawing and nail making to
reflect market prices as not supported by substantial evidence, id. at 42–44.
Defendant, United States (“Defendant”), responds that the court should deny the
motions of Mid Continent and PT and sustain Commerce’s Final Results in full. See Def.’s
Resp. Opp’n Pls.’ Rule 56.2 Mots. J. Agency R. Confidential Version 9–54, Aug. 3, 2016,
ECF No. 47 (“Def.’s Resp.”). Mid Continent filed a response, as defendant-intervenor, in
opposition to PT’s motion, see Resp. Br. Mid Continent Steel & Wire, Inc. Opp’n PT
Enterprise Inc. et al.’s R. 56.2 Mot. J. Agency R. Confidential Version, Aug. 3, 2016, ECF
No. 42 (“Mid Continent Resp. Br.”), and PT filed a response, as defendant-intervenors, in
1 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.
2 The court consolidated Mid Continent’s challenge with an action filed by PT, an individual
exporter of steel nails, and Pro-Team Coil Nail Enterprise Inc. (“Pro-Team”), Unicatch Industrial
Co., Ltd., WTA International Co., Ltd., Zon Mon Co., Ltd., Hor Liang Industrial Corporation,
President Industrial Inc., and Liang Chyuan Industrial Co., Ltd., producers of steel nails
(collectively “PT”). See Order, November 19, 2015, ECF No. 20.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 3 of 45

Court No. 15-00213 	Page 4
PUBLIC VERSION
opposition to Mid Continent’s motion. See Def.-Intervenors’ Resp. Br. Opp’n Pl.’s Mot. J.
Agency R. Confidential Version, Aug. 3, 2016, ECF No. 48 (“PT Resp. Br.”).
For the reasons that follow, Commerce’s final results are sustained in part and
remanded in part. 	Specifically, the court sustains Commerce’s determinations: (1) that
Pro-Team is unaffiliated with the [[ 	]] tollers in question; (2) to use the Cohen’s d test
within the differential pricing analysis to determine the existence of a pattern of significant
price differences; (3) to use a simple average to calculate the pooled standard deviation
in the Cohen’s d test of the differential pricing analysis; (4) to not offset dumped sales
with non-dumped sales in calculating the respondent’s antidumping duty margin using the
average-to-transaction methodology; and (5) to disregard transfer prices paid by Pro-
Team to certain affiliated tollers in its calculation of normal value (“NV”). 	The court
remands Commerce’s allocation of expenses associated with Pro-Team’s separate
steam line of business for further explanation and consideration consistent with this
opinion.
BACKGROUND
On June 25, 2014, in response to a petition filed by Mid Continent, Commerce
initiated an antidumping duty (“ADD”) investigation of certain steel nails from six countries,
including Taiwan. 	See Certain Steel Nails from India, the Republic of Korea, Malaysia,
the Sultanate of Oman, Taiwan, the Republic of Turkey, and the Socialist Republic of
Vietnam: Initiation of Less-Than-Fair-Value Investigations, 79 Fed. Reg. 36,019 (June 25,
2014) (notice of initiation of ADD investigations). 	Commerce selected Taiwanese
exporters PT and its affiliated producer, Pro-Team, and Quick Advance, Inc. and its
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 4 of 45

Court No. 15-00213 	Page 5
PUBLIC VERSION
affiliated producer, Ko’s Nails Inc., as mandatory respondents for the investigation. See
Certain Steel Nails from Taiwan: Negative Preliminary Determination of Sales at Less
Than Fair Value and Postponement of Final Determination, 79 Fed. Reg. 78,053, 78,054
(Dep’t Commerce Dec. 29, 2014) (preliminary determination of sales at less than fair
value, postponement of final determination) (“Prelim. Results”); Decision Memorandum
for the Preliminary Determination in the Antidumping Duty Investigation of Certain Steel
Nails from Taiwan at 2, PD 225, bar code 3247845-01 (Dec. 17, 2014) (“Prelim. Decision
Memo”); 3 see 19 U.S.C. § 1677f-1(c)(2)(B).
On December 29, 2014, Commerce issued its negative preliminary determination.
See Prelim. Results, 79 Fed. Reg. at 78,053; Prelim. Decision Memo at 1. 	Commerce
applied the differential pricing analysis and determined that, although 41.73% of PT’s
sales passed the Cohen’s d test, a meaningful difference did not exist in the dumping
margins that would result using the standard A-to-A methodology and the alternate mixed
methodology. Id. at 12. Commerce accordingly applied the standard average-to-average
(“A-to-A”) methodology to all of PT’s sales, id., and preliminarily determined that
respondents’ steel nails from Taiwan “are not being, or are not likely to be, sold in the
United States at less than fair value.” 	Id. at 1. 	Commerce preliminarily assigned PT a
weighted-average dumping margin of 0.00%. 	Prelim. Results, 79 Fed. Reg. at 78,054.
3 On October 16, 2015, Defendant submitted indices to the public and confidential administrative
records, which identify the documents that comprise the public and confidential administrative
records to the Commerce’s final determination. 	The indices to the public and confidential
administrative records to Commerce’s final determination can be located at ECF No. 17. 	All
further references to the documents from the administrative records are identified by the numbers
assigned by Commerce in these administrative records.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 5 of 45

Court No. 15-00213 	Page 6
PUBLIC VERSION
Commerce found that PT used certain affiliated tollers to produce its steel nails and
accordingly Commerce adjusted the transfer prices paid for wire drawing and nail making
to reflect the market price. 	See Prelim. Decision Memo at 14. 	Commerce also
disregarded certain transactions between Pro-Team and its affiliated tollers because it
determined that there was a difference between the market price and transfer prices for
wire drawing and nail making services. 	Id. at 14. 	Commerce also preliminarily
determined that PT and the rest of its tollers were unaffiliated. 	Cost of Production and
Constructed 	Value 	Calculation 	Adjustments 	for 	the 	Preliminary 	Determination—PT
Enterprise Inc. at 2, CD 200, bar code 3248421-01 (Dec. 17, 2014). 	Commerce further
found that PT did not have a viable comparison market, so it calculated a constructed
value (“CV”) as the basis for NV using the financial statements of PT affiliate Pro-Team.
Prelim. Decision Memo at 16.
On May 13, 2015, Commerce issued its final determination. See Final Results, 80
Fed. Reg. at 28,959 and accompanying Issues and Decision Memorandum for the
Affirmative Final Determination in the Less than Fair Value Investigation of Certain Steel
Nails from Taiwan, Oct. 16, 2015, ECF No. 17 (“Final Decision Memo”). 	Commerce
continued to use Pro-Team’s financial statements to calculate CV. Final Decision Memo
at 10–15. However, Commerce declined to allow subsidy income received by Pro-Team
to 	offset 	Pro-Team’s 	general 	and 	administrative 	expenses 	because 	Commerce
concluded “the subsidy is not related to the general operations of the company as a whole,
but instead appears directly related to and intended for the company’s other steam line
of business.” Id. at 55. Commerce applied this subsidy income as an offset to Pro-Team’s
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 6 of 45

Court No. 15-00213 	Page 7
PUBLIC VERSION
cost of goods sold instead. 	Id. 	Commerce also continued to disregard transactions
between Pro-Team and certain affiliated tollers for wire drawing and nail making services,
id. at 53, and continued to find Pro-Team unaffiliated with its other [[ 	]] tollers. Id. at 50–
53. 	Commerce determined that 42.27% of PT's U.S. sales had passed the Cohen’s d
test, id. at 19, and accordingly determined to apply the mixed methodology, by which
Commerce applies the average-to-transaction (“A-to-T”) method to PT’s sales that
passed the Cohen’s d test and the A-to-A method to PT’s sales that did not pass the
Cohen’s d test to calculate a respondent’s weighted-average dumping margin. 	Id.
Commerce determined that a meaningful difference existed between the resultant A-to-A
margin and mixed methodology margin, so applied the mixed methodology to calculate
PT’s weighted-average dumping margin. 	Commerce subsequently assigned PT a
weighted-average dumping margin of 2.24%. Final Results, 80 Fed. Reg. at 28,961. The
final determination resulted in an ADD order on subject nails from Taiwan. Order, 80 Fed.
Reg. at 39,994.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 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 an administrative 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).
4 Further citations to Title 28 of the U.S. Code are to the 2012 edition.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 7 of 45

Court No. 15-00213 	Page 8
PUBLIC VERSION
DISCUSSION
I. 	Affiliation Between Pro-Team and Certain of its Tollers
Mid Continent challenges as unsupported by substantial evidence Commerce’s
determination that PT’s affiliate Pro-Team 5 is unaffiliated with [[ 	]] of its tollers. 6 	Mid
Continent Br. 17–42; see Final Decision Memo at 50–53. 	In particular, Mid Continent
argues that Pro-Team’s purportedly unaffiliated tollers are and have been reliant upon
Pro-Team, 	Mid 	Continent 	Br. 	22–27, 	35–37, 	and 	that 	Pro-Team 	is 	“legally 	and
operationally in a position to exercise restraint and direction over” the tollers through a
close supplier relationship, such that Commerce should have found Pro-Team and the
tollers affiliated and accordingly disregarded the transactions between them for purposes
of calculating costs of production. Id. at 27–35; see 19 U.S.C. §§ 1677(33), 1677b(f)(2).
Defendant responds that substantial evidence supports Commerce’s determination that
Pro-Team and the [[ 	]] tollers are not affiliated. 	Def.’s Resp. 44–52. 	For the reasons
that follow, Commerce’s determination that Pro-Team is not affiliated with the [[ 	]] tollers
in question is supported by substantial evidence.
5 Commerce determined that PT and Pro-Team are affiliated pursuant to 19 U.S.C. § 1677(33)(F)
because PT and Pro-Team “shar[e] a common shareholder,” who “owns a sufficient percentage
of PT and Pro-Team to establish control over both companies.” Prelim. Decision Memo at 7. The
finding that PT and Pro-Team are affiliated has not been challenged here.
6 PT indicated to Commerce that Pro-Team uses the services of tolling companies to produce its
nails. See, e.g., PT Enterprise Section D Response at 3, CD 61–61, bar code 3228714-01 (Sept.
16, 2014) (“[All production process activities] are done on a tolling basis. Pro-team [organizes all
the production. As such, besides providing the raw material, collating materials and packing
materials, Pro-team also incurred] labor, water, electricity and other common factory overhead
expenses in its normal course of business.”).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 8 of 45

Court No. 15-00213 	Page 9
PUBLIC VERSION
Pursuant to 19 U.S.C. § 1677b(f)(2), Commerce may disregard transactions
between persons found to be affiliated for purposes of calculating costs of production, “if,
in the case of any element of value required to be considered, the amount representing
that element does not fairly reflect the amount usually reflected in sales of merchandise
under consideration in the market under consideration.” 	19 U.S.C. § 1677b(f)(2).
Commerce finds affiliation where, inter alia, some form of control exists between persons
or entities. 7 	19 U.S.C. §§ 1677(33)(F), (G); see SAA, H.R. Rep. No. 103-316, vol. 1 at
838, 1994 U.S.C.C.A.N. at 4,175. 8 Commerce finds that control exists where one person
or entity is “legally or operationally in a position to exercise restraint or direction over the
other person” or entity. 19 U.S.C. § 1677(33). To determine if control exists pursuant to
19 U.S.C. § 1677(33), Commerce considers the existence of certain relationships,
7 Specifically, relevant here, this control may be in the form of “two or more persons [or entities]
directly or indirectly controlling, controlled by, or under common control with, any person [or
entity]” or “any person [or entity] who controls any other person [or entity] and such other person
[or entity].” 19 U.S.C. §§ 1677(33) (F), (G).
8 The Statement of Administrative Action accompanying the Uruguay Round Agreements Act
(“SAA”) explains that control may also exist within corporate groupings, see SAA, H.R. Rep. No.
103-316, vol. 1 at 838, 1994 U.S.C.C.A.N. at 4,175, so “persons” here is considered to also apply
to “entities.” Specifically, the SAA explains that an emphasis on control was included in the
statutory definition of affiliated persons due to the Administration’s position
that including control in the definition of "affiliated" will permit a more sophisticated
analysis which better reflects the realities of the marketplace. The traditional focus
on control through stock ownership fails to address adequately modem business
arrangements, which often find one firm "operationally in a position to exercise
restraint or direction" over another even in the absence of an equity relationship.
A company may be in a position to exercise restraint or direction, for example,
through corporate or family groupings, franchises or joint venture agreements, debt
financing, or close supplier relationships in which the supplier or buyer becomes
reliant upon the other.
SAA, H.R. Rep. No. 103-316, vol. 1 at 838, 1994 U.S.C.C.A.N. at 4,175.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 9 of 45

Court No. 15-00213 	Page 10
PUBLIC VERSION
including “corporate or family groupings; franchise or joint venture agreements; debt
financing; and close supplier relationships.” 19 C.F.R. § 351.102(b)(3) (2013). 9 For the
presence of these relationships to evidence control, however, the relationship must have
“the potential to impact decisions concerning production, pricing or cost.” Id.
Here, Commerce sought and examined information from Pro-Team and its tollers
for indications of control based on close supplier relationships, 10 and determined that the
evidence could not support a finding of control. 	Final Decision Memo at 50–53.
Commerce analyzed the nature of the tolling relationships, including the duration of the
tolling relationships, whether Pro-Team owned the tollers’ machinery, land, or buildings,
and whether Pro-Team and the tollers shared common stock. Id. at 50. Commerce also
considered “(i) the terms and provisions of supply agreements; (ii) the relative percentage
that tolling services to Pro-Team represented of each of the suppliers’ total sales; (iii) the
terms of any financing agreements with the suppliers; and (iv) the overall profitability of
the tollers.” Id. Commerce found that many of the tollers operated as tollers prior to doing
business with Pro-Team, id. at 51, there was no common stock or familial ownership
between the entities, id. at 50–51, and Pro-Team did not share employees, officers, or
managers with its tollers. Id. at 50. Commerce also found that: i) there were no contracts
or supply agreements between Pro-Team and the unaffiliated tollers “locking the toller
9 Further citations to Title 19 of the Code of Federal Regulations are to the 2013 edition.
10 The other factors Commerce may consider to find control under 19 C.F.R. § 351.102(b)(3)—
corporate or family groupings; franchise or joint venture agreements; debt financing—are not
applicable to the relationship between Pro-Team and its tollers. See Final Decision Memo 50–
52.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 10 of 45

Court No. 15-00213 	Page 11
PUBLIC VERSION
into providing services for a specific period of time,” id. at 51; ii) although many of the
tollers supplied Pro-Team exclusively, nothing prohibited those tollers from supplying
services to others, 11 see id. at 51–52; iii) there were no debt financing agreements
between Pro-Team and the tollers, id. at 52; and iv) most of the tollers were profitable
during 2013. 12 See id. Based on these findings, Commerce determined that Pro-Team
and the [[ 	]] tollers exhibited “typical economic cooperation” of suppliers and a producer
with a “decentralized business model,” and did not evidence “the potential to impact
decisions concerning production, pricing or cost” or the ability to “exercise restraint or
direction” over the other. 	See id.; 19 C.F.R. § 351.102(b)(3); 19 U.S.C. § 1677(33).
Commerce concluded that these relationships did not create affiliation between Pro-Team
and its tollers. Final Decision Memo at 53.
Commerce reasonably concluded that Pro-Team’s relationships with its tollers do
not rise to the level of control necessary to support a finding of affiliation. The statute, 19
U.S.C. § 1677(33), and the regulation, 19 C.F.R. § 351.102(b)(3), together seek to identify
producer-supplier relationships of such an integrated nature that the two entities cannot
be said to transact at arm’s length. Commerce sought evidence of conditions that would
logically indicate whether either party was able to operate freely from the other, including
shared physical space, exclusivity contracts, lack of profitability of the tollers, the
11 Commerce found that, to the contrary, the record “indicates that there are at least 136
producers/exporters of nails in Taiwan from which the U.S. and comparison-market customers
can purchase nails, thereby eliminating any notion of dependence on Pro-Team by its unaffiliated
tollers.” Final Decision Memo at 52.
12 This finding was significant to Commerce, as “[t]he fact that these suppliers were profitable
suggests that Pro-Team lacks the ability to control completely the prices at which it purchases
services from its tollers.” Final Decision Memo at 52.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 11 of 45

Court No. 15-00213 	Page 12
PUBLIC VERSION
presence of control over prices, common ownership, and shared employees. 	Final
Decision Memo at 50–52. 	Implicit in Commerce’s focus on these conditions is that the
presence of these conditions would indicate that one entity functionally controlled the
other. 	Commerce reasonably concluded here, from the absence of most of these
conditions, that the tolling relationships are not the type of close supplier relationships
that the statute and regulation seek to identify (i.e., those that lead to unfair transactions
with 	unfair 	prices). 	Mid 	Continent’s 	argument 	that 	the 	record 	does 	not 	support
Commerce’s findings is unavailing. 	Mid Continent contends that control exists because
the tollers did the large majority of their business with Pro-Team, that many of the tollers
share facilities with Pro-Team or its affiliated tollers, and that many of the relationships
are longstanding. See Mid Continent Br. 21–42. The fact that Pro-Team’s relationships
with tollers are long-standing or exclusive is not dispositive; Commerce found that many
of the tollers had been in business before their relationships with Pro-Team, see Final
Decision Memo at 51, and that none of the tollers had the “expectation of exclusively
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 12 of 45

Court No. 15-00213 	Page 13
PUBLIC VERSION
providing a particular service to Pro-Team.” 	Id. at 52. 13 	Commerce’s assessment and
ultimate conclusion is reasonable. 14
13 Mid Continent further contends that Commerce’s determination conflicts with prior practice
which, according to Mid Continent, requires Commerce to give great weight to the percentage of
the business provided by the tollers to Pro-Team. Mid Continent Br. 20, 24, citing Solid Fertilizer
Grade Ammonium Nitrate From the Russian Federation, 65 Fed. Reg. 1139, 1143 (Dep’t
Commerce Jan. 7, 2000) (preliminary determination of sales at less than fair value). The cited
case does not demonstrate the existence of such a practice. Rather it demonstrates only that
Commerce has previously determined that “a close supplier relationship may occur when a
majority of sales are made to one customer,” Solid Fertilizer Grade Ammonium Nitrate From the
Russian Federation, 65 Fed. Reg. 1139, 1143 (Dep’t Commerce Jan. 7, 2000), which is not
inconsistent with Commerce’s finding in the instant case.
14 In the conclusion of its moving brief, Mid Continent requests in the alternative that the court
remand to Commerce its determination regarding at least [[ 	]] of Pro-Team’s [[ 	]] purportedly
unaffiliated tollers:
To the extent that the Court finds that the evidence does not support [a finding of
affiliation] for all [[ 	]] tollers, Mid Continent respectfully submits that the Court
should remand the Final Determination to Commerce to find that the record
contains substantial evidence to establish that the following [[ 	]] purportedly
unaffiliated 	tollers 	are 	affiliated 	with 	Pro-Team 	pursuant 	to 	19 	U.S.C.
§ 1677(33)(G), and the transactions between these tollers and Pro-Team should
be evaluated pursuant to 19 U.S.C. § 1677b(f)(2): [[
]].
Mid Continent Br. 42. 	Mid Continent highlighted facts (taken from Pro-Team’s submissions to
Commerce) detailing the conditions of each of these tollers’ tolling relationship with Pro-Team.
Id. at 7–14. These facts include: the nature of the tolling activities provided by each toller; each
toller’s profit margin; whether the toller or Pro-Team owns the tolling machinery and space;
whether the toller has its own employees; the percentage of its business that each toller conducts
with Pro-Team; the duration of the tolling relationship; and the tolling fee charged to Pro-Team.
Id. 	Mid Continent also highlighted these facts in its case brief to Commerce. 	See Petitioner’s
Administrative Case Brief at 57–70, CD 264, PD 285, bar code 3268085-01 (Mar. 31, 2015).
Although Commerce did not specifically address any of the [[ 	]] tollers in the Final Decision
Memo, Commerce referenced certain facts highlighted in Mid Continent’s case brief regarding
these tollers, Final Decision Memo at 48, n.218, 219, 222, and cited Pro-Team’s data for all of the
[[ 	]] tollers, which includes data for these [[ 	]] tollers. Final Determination Memo at 50–52;
Cost 	of 	Production 	and 	Constructed 	Value 	Calculation 	Adjustments 	for 	the 	Preliminary
Determination—PT Enterprise Inc., Department of Commerce, Attach. 1, CD 200, bar code
3248421-01 (Dec. 17, 2014). Mid Continent does not make explicit why it argues in the alternative
for at least these [[ 	]] tollers to be found affiliated, though it appears that these [[ 	]] tollers
(footnote continued)
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 13 of 45

Court No. 15-00213 	Page 14
PUBLIC VERSION
II. 	Differential Pricing Analysis
PT challenges three aspects of Commerce’s differential pricing analysis and the
resultant application of the alternate A-to-T methodology in this investigation. See PT Br.
8 –35. 	First, PT contends that Commerce’s application of the Cohen’s d test, including
the use of the coefficient threshold, in the differential pricing analysis is contrary to the
statute, arbitrary, and otherwise unreasonable. Id. at 25 –30. Second, PT also challenges
as unreasonable, in general and as applied, Commerce’s use of a simple rather than
weighted-average to calculate the pooled standard deviation for the Cohen’s d test. 	Id.
at 30 –35. 	Third, PT argues that Commerce’s application of the alternate A-to-T
methodology, and specifically its use of “double zeroing,” to calculate PT’s antidumping
duty margin was contrary to the statute. 	Id. at 18 –25. 	Each of PT’s arguments with
respect to Commerce’s differential pricing analysis are unavailing. For the reasons that
follow, 	Commerce’s 	determination 	is 	supported 	by 	substantial 	evidence 	and 	in
accordance with law.
A. Exhaustion
As an initial matter, Mid Continent argues that the court should reject PT’s
arguments related to Commerce’s differential pricing analysis because PT failed to
conduct the highest percentages of their business with Pro-Team (with each of them doing either
[[ 	]]% or [[ 	]]% of its business with Pro-Team, while each of the other [[ 	]] tollers conducts
much lower percentages of their business with Pro-Team). 	See PT Enterprise Supplemental
Section D Response, Ex. SD-12, CD 79–84, PD 139, bar codes 3237002-01–05 (Oct. 21, 2014).
Nothing in the details highlighted by Mid Continent undermines Commerce’s determination that
these [[ 	]] tollers are unaffiliated.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 14 of 45

Court No. 15-00213 	Page 15
PUBLIC VERSION
exhaust its substantial evidence arguments before Commerce. 15 	Mid Continent Resp.
11 –16, 40. 	Mid Continent contends that, before Commerce, PT only challenged the
differential pricing analysis on legal grounds while, before the court, PT challenges the
differential pricing analysis on additional legal grounds and on substantial evidence
grounds. 	Id. at 11 –16. 	PT replies that the exhaustion doctrine is inapplicable here,
because PT’s substantial evidence challenges to the differential pricing analysis arose
only upon Commerce’s application of the analysis in the final determination and because
Commerce 	was 	on 	notice 	of 	these 	arguments 	as 	PT 	raised 	these 	challenges
“preemptively” in its administrative case brief to Commerce following the preliminary
determination. 	Taiwan Plaintiffs’ Reply Br. Confidential Version 11–13, Sept. 23, 2016,
ECF No. 58 (“PT Reply Br.”). 	For the reasons that follow, the exhaustion doctrine does
not bar PT from bringing its challenges to the differential pricing analysis before this Court.
The court must, “where appropriate, require the exhaustion of administrative
remedies.” 	28 U.S.C. § 2637(d). 	Commerce’s regulations require parties to submit a
case brief containing all their arguments. 	See 19 C.F.R. § 351.309(c)(2). 	Exhaustion
ensures that the administrative agency maintains the authority to thoroughly perform its
functions, including reviewing and responding to any perceived error, before any
challenges to its actions are heard by this Court. 	United States v. L.A. Tucker Truck
Lines, Inc., 344 U.S. 33, 37 (1952); Carpenter Tech. Corp. v. United States, 30 CIT 1373,
1374–75, 452 F. Supp. 2d 1344, 1346 (2006). 	Nonetheless, the application of the
15 Defendant does not argue exhaustion on this point. See generally Def.’s Resp.; Confidential
Oral Arg. Tr. 63–64, Mar. 2, 2017, ECF No. 82.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 15 of 45

Court No. 15-00213 	Page 16
PUBLIC VERSION
exhaustion doctrine in trade cases is to be exercised with a measure of discretion by the
court. See, e.g., Corus Staal BV v. United States, 502 F.3d 1370, 1381 (Fed. Cir. 2007)
(“[A]pplying exhaustion principles in trade cases is subject to the discretion of the judge
of the Court of International Trade.”).
As discussed above, Commerce issued a negative preliminary determination in
this investigation after preliminarily applying the standard A-to-A methodology to all of
PT’s sales. 	See Prelim. Results, 79 Fed. Reg. at 78,054; Prelim. Decision Memo at 1,
12. PT nonetheless included challenges to Commerce’s differential pricing analysis in its
administrative case brief, noting that it was raising the arguments should the differential
pricing analysis result in the final determination “in different percentages,[ . . . or in
Commerce] deciding that the differences in prices cannot be taken into account using the
preferred 	A-A 	methodology.” 	Admin. 	Case 	Br. 	PT/Pro-Team, 	Antidumping 	Duty
Investigation of Certain Steel Nails from Taiwan at 8, CD 262, bar code 3267614-01 (Mar.
31, 2015) (“PT Admin. Case Br.”), PT acknowledges that its arguments before the agency
were unsupported by facts, but emphasizes it did not put forth specific facts because facts
to support the challenges “did not exist yet” at the time of submission of its case brief to
Commerce. 	PT Reply Br. 12–13 (emphasis in original). 	When Commerce did reach a
different result in the final determination, after applying the mixed methodology and
assigning PT a weighted-average dumping margin of 2.24%, Final Results, 80 Fed. Reg.
at 28,961, PT challenged the differential pricing analysis before this court on substantial
evidence grounds, supported by the facts of the case. See generally PT Br. 5–35.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 16 of 45

Court No. 15-00213 	Page 17
PUBLIC VERSION
PT’s substantial evidence challenge and the facts to support it arose in the final
determination, after Commerce applied a different methodology and reached a materially
different result for PT than it had reached in the preliminary determination. 	Barring PT
from bringing this claim now would leave PT without the opportunity to be heard on this
substantial evidence challenge. 	Additionally, a party cannot be required to raise a
particular challenge preemptively before the facts support it. 	Any such preemptive
substantial evidence challenge would be necessarily speculative, illogical, and useless.
Nonetheless, PT did raise relevant arguments in its administrative case brief to notify
Commerce of its objections to the differential pricing analysis. The court finds that, under
these circumstances, Commerce was on sufficient notice of PT’s arguments, despite that
the arguments did not include specific factual challenges.
B. Cohen’s d coefficient threshold
PT challenges as contrary to law, unreasonable, and arbitrary Commerce’s use of
the Cohen’s d test in its differential pricing analysis to assess whether there are significant
price differences among a particular group of U.S. sales. 	PT Br. 25 –30. 	Defendant
responds that the Cohen’s d test is in accordance with law and reasonable, generally and
as applied to PT’s sales in this investigation. See Def.’s Resp. 23 –26. For the reasons
that follow, PT’s challenges are unavailing.
Section 19 U.S.C. §§ 1677f-1(d)(1)(B)(i) and (ii) provide that Commerce may use
the alternate A-to-T methodology to calculate weighted-average dumping margins where
(i) Commerce finds a pattern of export prices for comparable merchandise that differ
significantly among purchasers, regions, or periods of time, and (ii) Commerce explains
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 17 of 45

Court No. 15-00213 	Page 18
PUBLIC VERSION
why 	such 	differences 	cannot 	be 	taken 	into 	account 	using 	the 	standard 	A-to-A
methodology. 16 See 19 U.S.C. §§ 1677f-1(d)(1)(B)(i)–(ii).
As no statute or regulation guides Commerce in determining whether a pattern of
significant price differences exists, Commerce is afforded broad discretion to select a
methodology to make that determination. See Fujitsu General Ltd., 88 F.3d 1034, 1039
(Fed. Cir. 1996); Torrington Co. v. United States, 68 F.3d 1347, 1351 (Fed. Cir. 1995). In
situations involving complex and technical methodological choices, Commerce has broad
discretion and the court need only address whether Commerce’s methodological choice
is reasonable. See Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 48–49 (1983) (“[A]n agency must cogently explain why it has exercised its
discretion in a given manner.”); see Smith-Corona Group v. United States, 713 F.2d 1568,
1571 (Fed. Cir. 1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679
(1984); Fujitsu Gen. Ltd., 88 F.3d at 1039 (granting Commerce significant deference in
determinations “involv[ing] complex economic and accounting decisions of a technical
nature”); Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404–405, 636 F.
Supp. 961, 966 (1986), aff’d, 810 F.2d 1137, 1139 (Fed. Cir. 1987).
16 In an ADD investigation, Commerce ordinarily determines whether the subject merchandise is
being sold in the United States at less than fair value by using the A-to-A methodology. See 19
U.S.C. § 1677f-1(d)(1)(A)(i). 	Under A-to-A, Commerce compares the weighted-average of the
normal value of the merchandise to the weighted-average of the export prices (or constructed
export prices) for comparable merchandise. 	See id. 	Although the transaction-to-transaction
methodology (“T-to-T”), which is “a comparison of the normal values of individual transactions to
the export prices of individual transactions,” is also a statutorily preferred method (under 19 U.S.C.
§ 1677f-1(d)(1)(A)(ii)), Commerce’s regulations provide that T-to-T will be employed only in rare
cases, “such as when there are very few sales of subject merchandise and the merchandise sold
in each market is identical or very similar or is custom-made.” 19 C.F.R. § 351.414(c)(2).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 18 of 45

Court No. 15-00213 	Page 19
PUBLIC VERSION
Commerce determines whether a pattern of significant price differences exists
among purchasers, regions, or periods of time with the differential pricing analysis. Final
Decision Memo at 16; Prelim. Decision Memo at 10. 	The first stage of the differential
pricing analysis is the Cohen’s d test, which Commerce uses to measure the degree of
price disparity between two groups of sales. 	Prelim. Decision Memo at 11; see Final
Decision Memo at 20–21, 24–26. In the Cohen’s d test, Commerce calculates the number
of standard deviations by which the weighted-average net prices of U.S. sales for a
particular purchaser, region, or time period (the “test group”) differ from the weighted-
average net prices of all other U.S. sales of comparable merchandise (the “comparison
group”). 17 See Prelim. Decision Memo at 11; Final Decision Memo at 25. The result of
this calculation is a coefficient. See Prelim. Decision Memo at 11; Final Decision Memo
at 25. To arrive at the coefficient, Commerce divides the difference in the means of the
17 As Commerce explained,
Purchasers are based on the reported customer codes reported by [mandatory
respondents]. Regions are defined using the reported destination (i.e., State) and
are grouped into regions based upon standard definitions published by the U.S.
Census Bureau. Time periods are defined by the quarter within the [period of
investigation] being examined based upon the reported date of sale. For purposes
of analyzing sales transactions by purchaser, region, and time period, comparable
merchandise 	is 	considered 	using 	the 	product 	control 	number 	and 	any
characteristics of the sales, other than purchaser, region, and time period, that
[Commerce] uses in making comparisons between [export price] and NV for the
individual [antidumping duty] margins.
Prelim. Decision Memo at 10–11. To calculate a Cohen’s d coefficient for a particular test group
(all sales of the comparable merchandise to a specific purchaser, region, or time period), the test
group and comparison group (all other sales of the comparable merchandise) must each have at
least two observations and the sales quantity for the comparison group must account for at least
five percent of the total sales quantity of the comparable merchandise. 	See Prelim. Decision
Memo at 11.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 19 of 45

Court No. 15-00213 	Page 20
PUBLIC VERSION
net prices of the test group and comparison group by the pooled standard deviation. 18
Prelim. Decision Memo at 11; Def.’s Resp. 14. The coefficient is the number of standard
deviations by which the weighted-average of the comparison group and the test group
differ. 	See Def.’s Resp. 14; PT Br. 15. 	Commerce then uses a threshold to qualify the
extent of the difference measured: a group of sales with a coefficient equal to or greater
than 0.8 is said to “pass” the Cohen’s d test, which signifies to Commerce that a pattern
of price differences exists within that group of sales. See Prelim. Decision Memo at 11.
Commerce explained that the Cohen’s d test identifies relative difference, rather
than absolute difference, which allows Commerce to accurately assess the significance
of price differences within a group. 	Final Decision Memo at 25. 	Commerce explained
that a statistical tool which measures relative difference “quantifies the size of the
difference between two groups, and may therefore be said to be a true measure of the
significance of the difference.” 	Id. (emphasis in original; internal quotation and citation
omitted). Commerce explained that it finds the Cohen’s d test to be useful for determining,
per the statute, whether significant price differences exist within a certain group of sales,
precisely because this test captures relative difference. 	See id. 	Commerce thus finds
the Cohen’s d test to be a “reasonable tool” for effectuating its statutory directive to assess
whether there is a pattern of significant price differences among a particular group of U.S.
sales. Id. at 26.
18 The pooled standard deviation is derived using the simple average of the variances in the net
prices within the test and comparison groups. See Final Decision Memo at 28–29; Def.’s Resp.
14.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 20 of 45

Court No. 15-00213 	Page 21
PUBLIC VERSION
The court agrees that this methodology is reasonable. 	The significance of
differences between prices will depend on the prices themselves. A test which calculates
absolute difference would not afford Commerce an accurate picture in all instances of the
significance of price differences within a group. It is reasonable for Commerce to instead
use a test, such as the Cohen’s d test, to evaluate the relative differences in the export
prices between two groups in order to assess whether that difference is significant in
accordance with the statutory directive of 19 U.S.C. § 1677f-1(d)(1)(B)(i). Commerce has
sufficiently explained why its use of the Cohen’s d test is a reasonable method by which
to determine whether a pattern of significant price differences exists pursuant to 19 U.S.C.
§ 1677f-1(d)(1)(B)(i), and the court finds Commerce’s methodological choice to make this
determination using the Cohen’s d test, including its fixed thresholds, to be a reasonable
exercise of Commerce’s discretion.
PT contends that Commerce should dispel with the 0.8 coefficient threshold and
institute a more fluid test that considers case-by-case circumstances, in order to avoid
arbitrary results based on insignificant differences deemed significant by application of a
“rigid” threshold. See PT Br. 25–28. PT argues that Commerce’s “use of these arbitrary
thresholds without any further analysis of the relative or actual price differences at issue
in a case, within the context of the industry being analyzed,” does not comport with the
statute, id. at 28, and that the test as applied here resulted in arbitrary and unreasonable
results 	because 	there 	were 	instances 	in 	which 	“demonstrably 	insignificant 	price
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 21 of 45

Court No. 15-00213 	Page 22
PUBLIC VERSION
differences” passed the 0.8 threshold so were determined to be significant. 19 See id. at
28–29.
PT’s argument misunderstands the Cohen’s d test. As Commerce explained, the
test gauges relative differences, Final Decision Memo at 25–26, and measurement of
relative differences is necessarily case-by-case:
The purpose of identifying a pattern of prices which differ significantly is to
establish that the exporter’s pricing behavior has created conditions under
which dumping may be masked . . . . This is a determination made on the
facts on the record, i.e., the U.S. prices which exhibit the exporter’s pricing
behavior[.] . . . Without such a fact-based approach[,] . . . the Department’s
dumping calculations would be fraught with subjectivity with no regard to
transparency and predictability.
Id. at 20. It is discernible from this explanation that Commerce uses the Cohen’s d test
because the test allows a case-by-case analysis of whether the price differences between
groups of sales are significant. The test’s fixed 0.8 threshold allows Commerce to assess
the significance of relative differences with a consistent benchmark. 20 	See id. at 30.
19 For example, PT notes that, in one case, a price difference of $0.0029 was found to be
significant. See PT Br. 29.
20 Commerce explained how the Cohen’s d test identifies the significance of price differences:
The Cohen’s d coefficient measures the difference in the weighted-average prices
between the test group and the comparison group relative to the distribution of
prices within each group (i.e., the variance or standard deviation). As a result, if
prices within the test and comparison groups differ by only small amounts, then
the variance within each group is small and there only needs to be a proportionally
small difference in the weighted-average prices between the test group and the
comparison group to identify a significant difference. Likewise, if there would be a
wide dispersion of prices within either the test group or the comparison group, then
a difference between the weighted-average prices between the test group and the
comparison group would have to be correspondingly larger for the Cohen’s d test
to identify this difference to be significant.
Final Decision Memo at 30.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 22 of 45

Court No. 15-00213 	Page 23
PUBLIC VERSION
Without 	the 	consistent 	threshold, 	Commerce 	would 	have 	no 	way 	to 	assess 	the
significance of relative differences which differ in every case. 	Commerce is best
positioned to identify what constitutes a “significant” difference in a certain case. 	See
Fujitsu Gen. Ltd., 88 F.3d at 1039 (noting that Commerce is given significant deference
in determinations “involv[ing] complex economic and accounting decisions of a technical
nature”). 	Commerce sufficiently explained its methodology and that methodology
appears tailored to achieve the statutory directive. This test, including its use of the 0.8
threshold, 	is 	reasonable 	and 	within 	Commerce’s 	discretion 	to 	determine 	whether
significant price differences exist.
PT also argues that Commerce’s reliance on the Cohen’s d test in this case is
contrary to 19 U.S.C. § 1673b(b)(3), which instructs Commerce to consider price
differences of less than 2% not to constitute actionable dumping. See PT Br. 29–30. PT
emphasizes that, here, “there are [[ 	]] instances where the price differences identified
are less than 2% of the average price for the CONNUM,” id., and contends that “[i]t is
hard to imagine the statutory directive that would consider a 2% price difference not to be
indicative of dumping but sufficient to uncover targeted dumping.” Id. at 30. Section 19
U.S.C. § 1673b(b)(3) is inapposite here, as the provision instructs Commerce in
determining weighted-average dumping margins. The Cohen’s d test does not measure
dumping; it is a tool to measure price differences pursuant to 19 U.S.C. § 1677f-
1(d)(1)(B)(i). PT’s argument is unpersuasive.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 23 of 45

Court No. 15-00213 	Page 24
PUBLIC VERSION
C. Use of a simple average to calculate the pooled standard deviation
PT argues that it is unreasonable for Commerce to use a simple average rather
than a weighted-average to calculate the pooled standard deviation for the Cohen’s d
test, contending that a simple average is distortive and internally inconsistent. 21 See PT
Br. 30–35. PT proposes that Commerce instead weight the averages by observations or
sales quantities to ensure that every transaction is weighted equally, regardless of the
number of sales in the group. Id. at 35. Defendant responds that Commerce’s practice
of using a simple average for the pooled standard deviation is reasonable. 	See Def.’s
Resp. 26–29. 	PT has not demonstrated that Commerce’s use of a simple average is
unreasonable, in general or as applied to PT’s sales in this investigation.
As mentioned above, to calculate the Cohen’s d coefficient, Commerce divides the
difference in the weighted-averages of the net prices of the test group and the comparison
group by a pooled standard deviation of the comparison and test groups. Prelim. Decision
Memo at 11; see Final Decision Memo at 25. The pooled standard deviation is derived
using a simple average of the variances in the net prices within the test and comparison
21 PT claims that the use of simple averages in this stage of the differential pricing analysis is
inconsistent with Commerce’s use of weighted-averages elsewhere in the differential pricing
analysis, see PT Br. 31–32, and contends that “there is a reason why [Commerce] use[s] weight
averages in a lot of other places in this test and it doesn’t make sense why they wouldn't use it”
in this stage of the test as well. 	Confidential Oral Arg. Tr. 49, Mar. 2, 2017, ECF No. 82.
Defendant acknowledges that Commerce generally uses weighted-averages. 	Id. at 40. 	But
Commerce is not required to use a weighted-average in this part of the test simply because a
weighted-average is used at another part of the test. 	Each stage of the test has a different
objective, and Commerce should utilize the methodology it determines best achieves the objective
of each, regardless of the methodology used at a different stage. The relevant inquiry is whether
Commerce acted reasonably to achieve the objective of each stage.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 24 of 45

Court No. 15-00213 	Page 25
PUBLIC VERSION
groups. 22 	Final Decision Memo at 28–29. 	Commerce explained that it uses a simple
average for the pooled standard deviation to calculate an average of the comparison and
target group’s pricing behaviors that equally reflects both groups: “[b]y using a simple
average, the respondent’s pricing practices to each group [are] weighted equally, and the
magnitude of the sales to one group does not skew the outcome.” Id. At oral argument,
the Government further explained that Commerce uses a simple average in the pooled
standard deviation “to accord equal weight to pricing behavior to the test group and the
comparison group.” Confidential Oral Arg. Tr. 56, Mar. 2, 2017, ECF No. 82 (“Oral Arg.
Tr.”). 	Given this objective, weight-averaging by sales quantity “would inappropriately
move the pooled standard deviation toward the pricing behavior of either the test or
comparison group, depending on which had more weight.” Id.
It is apparent that the parties disagree as to the purpose of the pooled standard
deviation within the Cohen’s d test. PT’s position is that the pooled standard deviation is
used to discern “whether specific price changes in the test group are significantly different
from the rest” of the price changes overall for that CONNUM, Oral Arg. Tr. 60; PT Br. 30,
22 PT explains this practice in more detail:
The standard deviation of each group assesses how much prices fluctuate within
each group and is based on a weighted-average by quantity of the prices within
each group. The higher the standard deviation, the more prices within the group
fluctuate. The lower the standard deviation, the more stable the prices are. The
Department then calculates what it refers to as the pooled variance or pooled
standard deviation which is essentially a simple average of the standard deviations
of the test group and the [comparison] group.
PT Br. 14. PT noted that square roots are used in the calculation of the standard deviation so
that price changes above the mean do not cancel out price changes below the mean, and vice
versa. See id. at 14, n.6.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 25 of 45

Court No. 15-00213 	Page 26
PUBLIC VERSION
33, so the average used should reflect the overall average of the pricing behavior among
all sales in the test and comparison groups, regardless of the size of each group. 	See
Oral Arg. Tr. 60. PT argues that a weighted-average would account for size differences
between the test and comparison groups and ensure that each transaction is accorded
equal weight in the overall analysis. 	See PT Br. 30. 	Commerce does not dispute that
each transaction is not equally weighted in the simple average, but explains that the
objective of the pooled standard deviation is to calculate an average of the two groups’
prices so weighting both groups equally is important. 	See Final Decision Memo at 28–
29. 	Commerce explains that the pooled standard deviation should reflect the overall
average of the pricing behavior in the test and comparison groups, regardless of the
number of transactions or quantity of sales within each group. 	See id. 	Commerce
explains that a simple average ensures that the two groups’ average pricing behaviors
are weighted equally. Id.; see also Oral Arg. Tr. 56.
It is discernible from Commerce’s explanations that Commerce views the pooled
standard deviation as an average reflective of the respondent’s average pricing behavior
for these two groups, rather than an average reflective of all of the individual prices. 	A
simple average does ensure that “equal weight of pricing behavior [is given] to the test
and comparison groups.” 	Oral Arg. Tr. 57. The standard deviation is intended to serve
as a “yardstick” by which to measure the difference in a certain group of sales from the
overall spread of difference in the test and comparison groups. Id. at 52; Final Decision
Memo at 26. One logical way to create this yardstick is to average the pricing behaviors
of the two groups together. Although PT’s alternate weighted-average approach may be
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 26 of 45

Court No. 15-00213 	Page 27
PUBLIC VERSION
another reasonable way of achieving this yardstick, using a simple average to achieve it
is also reasonable.
PT’s contention that the simple average achieves a distorted standard deviation is
therefore unavailing. 	PT argues that the simple average is distortive because it gives
more power to the pricing of sales in lower-quantity groups, PT Br. 30–33; see also PT
Admin. Case Br. 20–22; Oral Arg. Tr. 49, which distorts the standard deviation given “[t]he
point of a pooled standard deviation is to come up with a coefficient that is representative
of the price changes that are going on within that time.” Oral Arg. Tr. 49. PT’s argument
of distortion is founded on a misunderstanding of the objective of the pooled standard
deviation. Using a simple average, certain sales have more effect over the outcome than
other sales. 	However, a different outcome is not a distortion; a distortion requires a
different result due to an unreasonable practice. 	Here, as Commerce’s practice is
reasonable within the objective of this stage of the test and achieves a coefficient
representative of the average price changes between the two groups, the use of a simple
average cannot be said to lead to distortive results here. 23
23 Commerce also explains that weight-averaging is inferior to simple averaging because it would
allow respondents to potentially manipulate the data. Final Decision Memo at 29. PT argues that
it is speculative that a respondent could or would manipulate by observations and that, regardless,
it would not be possible to manipulate by quantity of sales. PT Br. 33–34. Defendant conceded
at oral argument that it would not be possible to manipulate by quantity of sales. Oral Arg. Tr.
40–41. (Defendant-Intervenor disagreed, contending that it would also theoretically be possible
for a respondent to manipulate its reporting of quantity. See Oral Arg. Tr. 41–43). Commerce’s
argument that weight-averaging is inferior due to the possibility of manipulation therefore seems
problematic, but the court finds it is a secondary argument subsumed within the court’s
determination that the use of a simple average here is reasonable.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 27 of 45

Court No. 15-00213 	Page 28
PUBLIC VERSION
Finally, PT contends that the use of a simple average in the pooled standard
deviation was unreasonable as applied in this case. See PT Br. 34–35. Specifically, PT
presents calculations which it argues demonstrate that using an average weighted by
sales or quantity in the standard deviation would result in a de minimis dumping margin
for PT, while using a simple average resulted in a non-de minimis dumping margin. See
id. Calculations demonstrating this potential impact to this respondent of using a different
methodology are insufficient to demonstrate that Commerce’s use of the simple average
is unreasonable. PT has not presented evidence demonstrating that the use of a simple
average to calculate the pooled standard deviation is unreasonable as applied here.
Although understandably PT would prefer the methodology that leads to a de minimis
margin for PT, calculations resulting in a de minimis margin, without more, do not
demonstrate that the methodology which did resulted in a non-de minimis margin is
unreasonable or distortive.
D. “Double Zeroing”
PT argues that Commerce’s application of the mixed methodology, and specifically
its use of “double zeroing” when aggregating the A-to-A and A-to-T results, was contrary
to the statute. 	PT Br. 18–25. 	Defendant responds that its application of the mixed
methodology in this case was consistent with the statute and reasonable because
allowing negative A-to-A results to offset positive A-to-T results would defeat the purpose
of the methodology. 	Def.’s Resp. 18–23. 	Commerce’s application of the mixed
methodology is in accordance with law and is reasonable in this case.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 28 of 45

Court No. 15-00213 	Page 29
PUBLIC VERSION
Commerce applies the alternate A-to-T methodology based on the percentage of
U.S. sales found to pass the Cohen’s d test. 24 See Prelim. Decision Memo at 11. When
the value of a respondent’s U.S. sales passing the Cohen’s d test accounts for more than
33 percent but less than 66 percent of the value of the respondent’s total U.S. sales,
Commerce applies a “mixed methodology” to calculate the weighted-average dumping
margin, using the standard A-to-A method (with offsetting dumped sales with non-dumped
sales) to calculate the dumping margin for the sales that did not pass the Cohen’s d test
and using the alternate A-to-T method (without offsetting dumped sales with non-dumped
sales) to calculate the dumping margin for the sales that did pass the Cohen’s d test. Id.;
Final Decision Memo at 26. 	Commerce then aggregates the results of the two
calculations to arrive at a weighted-average dumping margin for all of the respondent’s
U.S. sales. Prelim. Decision Memo at 11; Final Decision Memo at 26. When aggregating
the two calculations, Commerce does not offset the dumped sales by the non-dumped
24 Commerce makes this determination through conducting its “ratio test”:
The “ratio test” assesses the extent of the significant price differences for all sales as
measured by the Cohen’s d test. If the value of sales to purchasers, regions, and time
periods that pass the Cohen’s d test accounts for 66 percent or more of the value of total
sales, then the identified pattern of [export prices] that differ significantly supports the
consideration of the application of the A-to-T method to all sales as an alternative to the
A-to-A method. If the value of sales to purchasers, regions, and time periods that pass the
Cohen’s d test accounts for more than 33 percent and less than 66 percent of the value
of total sales, then the results support consideration of the application of an A-to-T method
to those sales identified as passing the Cohen’s d test as an alternative to the A-to-A
method, and application of the A-to-A method to those sales identified as not passing the
Cohen’s d test. If 33 percent or less of the value of total sales passes the Cohen’s d test,
then the results of the Cohen’s d test do not support consideration of an alternative to the
A-to-A method.
Prelim. Decision Memo at 11.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 29 of 45

Court No. 15-00213 	Page 30
PUBLIC VERSION
sales from either the A-to-A or A-to-T calculation. 	See Final Decision Memo at 26. 	PT
refers to this practice as “double zeroing.” See PT Br. 19.
Commerce explained that zeroing the non-dumped sales is required to ensure that
the masked dumping uncovered by the A-to-T method is preserved when the margin is
aggregated with the A-to-A results in the mixed methodology, just as the uncovered
masked dumping is preserved when the A-to-T method is applied to all of a respondent’s
sales. See Final Decision Memo at 26–27. Commerce explained that allowing the non-
dumped sales to instead offset the dumped sales would allow the non-dumped sales to
“reduce or completely negate” the masked dumping uncovered by A-to-T, rendering the
alternate method provided by the statute useless. 	Id. at 26. 	Thus, disallowing offsets
when aggregating in the mixed methodology allows Commerce to preserve the statutory
alternate remedy while also applying the A-to-T methodology proportionately based on
the degree of masked dumping identified. This methodological choice to not offset when
aggregating the margins in the mixed methodology is reasonable, as offsetting the
dumped sales with the non-dumped sales when aggregating would make it impossible
for Commerce to both preserve unmasked dumping uncovered with A-to-T and apply a
proportionate remedy.
The reasonableness of this methodology does not depend on the presence of a
pattern established for every sale, contrary to PT’s argument. 	See PT Br. 18–25. 	PT
focuses on the pattern to suggest that only sales within the pattern may be subject to the
remedy, including not offsetting non-dumped sales during the aggregation stage in the
mixed methodology. See id. at 25. However, Commerce’s test uses the existence of the
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 30 of 45

Court No. 15-00213 	Page 31
PUBLIC VERSION
pattern within the sales as a trigger for applying the alternate method, and Commerce
then uses the ratio test to decide what remedy to apply; not allowing offsets in the
aggregation step preserves that remedy. The statute provides Commerce with the A-to-
T methodology as a tool to capture masked dumping and thereby calculate more accurate
margins than would be possible using A-to-A. 	See 19 U.S.C. § 1677f-1(d)(1)(B);
Yangzhou Bestpak Gifts & Crafts Co., Ltd. v. United States, 716 F.3d 1370, 1379 (Fed.
Cir. 2013) (“An overriding purpose of Commerce’s administration of antidumping laws is
to calculate dumping margins as accurately as possible.”). 	Commerce’s decision to
effectuate the statute by applying the mixed methodology, without offsets during the
aggregation stage, to both preserve the masked dumping uncovered with A-to-T and
achieve a proportionate remedy is reasonable.
III. G&A Expense Ratio
PT challenges Commerce’s calculation of the General and Administrative (“G&A”)
expense ratio within its constructed value calculation. 	PT Br. 35–42. 	PT contests
Commerce’s determination to include in the calculation of PT’s G&A expense ratio certain
costs and expenses generated in the production and sale of steam, which Commerce
concluded 	is 	a 	separate 	line 	of 	business 	unrelated 	to 	the 	production 	of 	subject
merchandise by PT affiliate, Pro-Team. See id. at 38–39; see also Final Decision Memo
at 55. PT notes Defendant’s description of how Commerce calculated PT’s G&A expense
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 31 of 45

Court No. 15-00213 	Page 32
PUBLIC VERSION
ratio in its brief before the court is not consistent with Commerce’s actual calculation. 25
PT Reply Br. 15. 	Alternatively, PT argues that, if Commerce includes costs related to
Pro-Team’s separate steam production, subsidy income should offset G&A expenses. Id.
at 39–42. 	Defendant counters that Commerce followed its normal practice of allocating
company-wide costs to cost of goods sold (“COGS), Def.’s Resp. 35–36, and Commerce
acted reasonably and consistently with its practice in allocating the subsidy income
attributable to Pro-Team’s separate steam line of business. Id. at 39–40. Commerce fails
to state or explain how its cost allocation methodology could result in allocating certain
steam-related costs to G&A expenses, when it claims to have allocated all those costs to
COGS. 	On remand, Commerce must explain how it allocates different costs to the
respective components G&A expense ratio and explain why its determination is supported
by the record evidence or reconsider its determination.
Commerce calculates a respondent’s dumping margin by determining “the amount
by which the [NV] exceeds the export price . . . of the subject merchandise.” 19 U.S.C.
§ 1677(35)(A). NV should normally be calculated based on “the price at which the foreign
like product is first sold . . . for consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade.” 19 U.S.C. § 1677b(a)(1)(B)(i).
However, when, as here, Commerce determines that the respondent does not have viable
25 In its reply brief, PT points out that Commerce did not allocate all expenses attributable to steam
to cost of goods sold, as Defendant says Commerce did. PT Reply 15 (citing Def.’s Resp. 38).
Rather, PT claims that Commerce allocated research and development and depreciation costs to
G&A expenses, not to cost of goods sold. Id. (citing id. at Addendum). PT argues that, to the
extent steam expenses are properly included, they should all be allocated to COGS to be
consistent with Commerce’s practice, as described by Defendant. See id. at 17, n 7.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 32 of 45

Court No. 15-00213 	Page 33
PUBLIC VERSION
home or third-country market sales, the statute directs that Commerce may use a
constructed value to calculate a NV for respondent (i.e., CV). 26 	See 19 U.S.C.
§ 1677b(a)(4); 19 U.S.C. § 1677b(a)(1)(B)–(C); see also Prelim. Decision Memo at 13
(stating that Commerce used CV as the basis for NV because PT did not have a viable
comparison market).
In calculating constructed value, Commerce is required to include selling, general,
and administrative expenses. See 19 U.S.C. § 1677b(e)(3)(1)–(3). The statute does not
define selling, general, and administrative expenses. 	However, G&A expenses are
generally understood to mean “expenses which relate to the activities of the company as
a whole rather than to the production process.” Torrington Co. v. United States, 25 CIT
395, 431, 146 F. Supp. 2d 845, 885 (2001) (internal quotations omitted). The court affords
Commerce significant deference in developing a methodology for determining this
component of CV because it is a determination “involv[ing] complex economic and
accounting decisions of a technical nature.” 	Fujitsu Gen. Ltd. v. United States, 88 F.3d
26 The statute provides that CV of imported merchandise is equal to the sum of: (1) the cost of
materials of fabrication or other processing of any kind in producing the merchandise; (2) some
representation of the amounts incurred and realized for selling, general, and administrative
expenses and for profits in connection with the production and sale of merchandise for
consumption in the foreign country; and (3) packing and other expenses incidental to placing the
subject merchandise in condition packed and ready for shipment to the United States. 19 U.S.C.
§ 1677b(e)(1)–(3). 	If actual data are not available for selling, general, and administrative
expenses, then Commerce may calculate selling, general and administrative expenses based on:
(1) the actual amounts incurred and realized by the specific exporter or producer for selling,
general, and administrative expenses in connection with the production and sale, for consumption
in the foreign country, of merchandise of the same general category of products as the subject
merchandise; (2) the weighted-average of the actual amounts actually incurred and realized by
other exporters or producers subject to the investigation; or (3) based on any other reasonable
method. 19 U.S.C. § 1677b(e)(2)(B)(i)–(iii).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 33 of 45

Court No. 15-00213 	Page 34
PUBLIC VERSION
at 1039. However, Commerce’s “must cogently explain why it has exercised its discretion
in a given manner.” State Farm, 463 U.S. at 48–49.
Commerce states that its practice is to calculate and allocate G&A expenses based
on company-wide G&A costs, which are the expenses that “relate to the general
operations of the company as a whole” and not specific products and processes. 27 Final
Decision Memo at 56 (citing Issues and Decision Memorandum for the Final Results of
the Antidumping Duty Administrative Review on Narrow Woven Ribbons with Woven
Selvedge 	from 	Taiwan 	at 	29, 	A-583-844, 	(Apr. 	6, 	2015), 	available 	at
http://ia.ita.doc.gov/frn/summary/taiwan/2015-08436-1.pdf (last visited Mar. 20, 2017)
(“Ribbons with Woven Selvedge from Taiwan I&D”). Therefore, according to Commerce’s
stated practice, the numerator for the G&A expense ratio is the respondent’s expenses
attributable 	to 	general 	operations 	of 	the 	company 	and 	the 	denominator 	is 	the
respondent’s company-wide COGS. See id. Thus, the G&A expense ratio, expressed as
an equation is as follows:
= ݋݅ݐ ܴܽ ݁ݏ݊݁݌ݔܧ ܣ&ܩ )݁݀݅ݓ ݕ݊ܽ݌݉݋ܿ( ݏ݁ݏ݊݁݌ݔܧ ܣ&ܩ
)݁݀݅ݓ ݕ݊ܽ݌݉݋ܿ( ܵܩܱܥ
To compute the per-unit amount of G&A expense, the G&A expense ratio is multiplied by
the 	total 	costs 	of 	manufacture 	for 	each 	product 	assigned 	a 	control 	number 	by
27 Defendant restates Commerce’s practice in materially identical terms. See Def.’s Resp. 8.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 34 of 45

Court No. 15-00213 	Page 35
PUBLIC VERSION
Commerce. 28 	See PT Enterprise Section D Response at 26, CD 60–62, bar code
3228714-01–03 (Sept. 16, 2014) (“PT Sec. D. Resp.”).
Here, Commerce relied on Pro-Team’s financial statements to calculate the G&A
expense ratio in its preliminary determination. See Prelim. Decision Memo at 16. In its
initial questionnaire response, Pro-Team calculated its G&A expense ratio by excluding
all expenses related to its production and sale of steam from both G&A and COGS. 29
See PT Sec. D. Resp. at 21, 34, Exs. D-15, D-16. Following comments from interested
parties, Commerce asked Pro-Team to recalculate G&A to include steam related
production 	costs 	and 	expenses, 	and 	Pro-Team 	complied. 	See 	PT 	Enterprise
Supplemental Section D Response at 11–12, Exs. SD-21, SD-24, CD 79–84, bar codes
3237002-01–05 (Oct. 21, 2014). 	Pro-Team offset the G&A expenses generated in the
production of steam by certain other income. 	Id. at Ex. SD-24. 	These adjustments
resulted in an increase in Pro-Team’s G&A expense ratio for Commerce’s preliminary
determination. 30 	See Analysis of Data Submitted by PT Enterprise Inc. in Certain Nails
from Taiwan at Attach. 2, CD 194, bar code 3248230-01 (Dec. 14, 2014).
28 In its Section D questionnaire, Commerce defines G&A expenses as
those period expenses which relate indirectly to the general operations of the
company rather than directly to the production process. 	G&A expenses include
amounts incurred for general R&D activities, executive salaries and bonuses, and
operations relating to your company’s corporate headquarters.
PT Enterprise Section D Response at 26, CD 60–62, bar code 3228714-01–03 (Sept. 16, 2014).
Commerce does not define COGS either in its questionnaire or in its final determination. See id.;
Final Decision Memo.
29 The resulting G&A ratio calculated by Pro-Team was [[ 	]]%. PT Sec. D. Resp. at Ex. D-16.
30 The resulting G&A ratio increased to [[ 	]]%. 	See Analysis of Data Submitted by PT
Enterprise Inc. in Certain Nails from Taiwan at Attach. 2, CD 194, bar code 3248230-01 (Dec. 14,
2014).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 35 of 45

Court No. 15-00213 	Page 36
PUBLIC VERSION
In its final determination, Commerce found that some portion of the other income
Pro-Team had offset against G&A expenses represented an energy subsidy for steam
provided by the government of Taiwan to promote energy production. See Final Decision
Memo at 56 (citing PT Cost Verification Rep. at 22). Commerce did not allow the income
attributable to this subsidy to offset Pro-Team’s G&A expenses because Commerce
concluded “the subsidy is not related to the general operations of the company as a whole,
but instead appears directly related to and intended for the company’s other steam line
of business.” 	Id. 	Therefore, Commerce applied this income as an offset to COGS
denominator, not the G&A expense numerator. Id.
Commerce 	does 	not 	specify 	exactly 	how 	it 	allocates 	costs 	and 	expenses
attributable to a separate line of business, except to say that “[t]he costs associated with
the steam line of business were properly included in the denominator of the G&A expense
ratio calculation (i.e., COGS).” 31 	Final Decision Memo at 55. 	Defendant states that
Commerce allocates all costs and expenses attributable to Pro-Team’s steam business,
including research and development (“R&D”) expenses and depreciation expenses
attributable to steam production, to COGS (i.e., the denominator of the G&A expense
ratio). 	See Def.’s Resp. 32, 37–38. 	PT correctly points out that Defendant’s statement
“does not accurately reflect the manner in which Commerce actually calculated COGS
and G&A.” 	Pl.’s Reply Br. 15, Addendum, Sept. 23, 2016, ECF No. 58; see generally
31 Because PT does not have a viable home or third-country market, Commerce concluded that
it lacked a comparison market for selling expenses to use in its CV calculations. Prelim. Decision
Memo at 16. 	Commerce used PT’s financial statements to calculate the selling, general, and
administrative expenses component of CV. Id.; see also Final Decision Memo at 55; 19 U.S.C.
§ 1677b(e)(2)(B)(iii).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 36 of 45

Court No. 15-00213 	Page 37
PUBLIC VERSION
Verification of the Cost Response of PT Enterprise Inc. in the Antidumping Duty
Investigation of Certain Steel Nails from Taiwan at 20, Ex. CVE-9, CD 261, bar code
3265886-01 (Mar. 19, 2015) (“PT Cost Verification Rep.”) (demonstrating that Commerce
allocated certain expenses, including R&D, depreciation, and other expenses attributable
to Pro-Team’s steam line of business, to G&A expenses, and other expenses to COGS).
Commerce’s statement of its practice does not address why certain costs, specifically
R&D and depreciation, were allocated to G&A while others were allocated to COGS when
Commerce 	claims 	its 	practice 	is 	to 	allocate 	all 	expenses 	not 	attributable 	to 	the
administration of the company as a whole, including expenses attributable to the
production of non-subject merchandise, to COGS. 32 	On remand, Commerce must
explain its methodology for allocating costs associated with Pro Team’s separate steam
business and explain why that methodology is reasonable or reconsider its determination.
Commerce does not explain why it allocates certain types of expenses related to steam
production to G&A and others to COGS. 33
32 Defendant states that Commerce has a practice of including R&D activities in COGS where
these expenses are not considered to be part of a company’s general expenses in the calculation
of its G&A expense ratio. Def.’s Resp. Br. 37. However, neither Defendant nor Commerce cites
any 	practice that 	either 	states 	explicitly 	that 	R&D 	expenses 	attributable 	to 	non-subject
merchandise are allocated to COGS or explaining why it is reasonable to do so.
33 Missing from Commerce’s analysis and Defendant’s brief is an explanation why R&D and
depreciation expenses not attributable to production of subject merchandise (i.e., cost of
manufacture) and that cannot be attributed to company-wide administration (i.e., G&A) are
allocated to COGS. 	The proceedings cited by Defendant, focus on the propriety of including
certain expenses in G&A (i.e., the numerator of the G&A expense ratio), but they do not address
why it is reasonable to include all other company-wide expenses in COGS (i.e., the denominator
of the G&A expense ratio). 	See Issues and Decision Memorandum for the Antidumping Duty
Administrative Review on Certain Frozen Warmwater Shrimp from India – August 4, 2004,
(footnote continued)
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 37 of 45

Court No. 15-00213 	Page 38
PUBLIC VERSION
In the alternative, PT argues that, if Commerce includes costs related to Pro-
Team’s separate steam production in G&A, Commerce’s practice must require the
income from the subsidy benefiting Pro-Team’s steam production to offset those G&A
expenses attributable to its steam production. 	PT Br. 39–42. 	PT contends it would be
inconsistent to offset all subsidy income to COGS if some costs attributable to steam are
allocated to G&A. 	Id. 	Defendant counters that Commerce offset COGS (i.e., the
denominator) by the amount of government subsidy for the production of steam because
Commerce determined that the subsidy is unrelated to the general operation of the
company. Def.’s Resp. Br. 39 (citing Final Decision Memo at 56).
Defendant contends that Commerce’s practice permits income from a subsidy to
offset G&A expenses (i.e., the numerator of the G&A expense ratio) only where the
subsidy benefits the company as a whole, not where Commerce specifically finds that a
subsidy only benefits a particular line of business. See id. (citing Final Decision Memo at
56). Although Commerce cites this same statement of its practice, Final Decision Memo
at 56 (citing Certain Pasta From Italy, 64 Fed. Reg. 6,615, 6,626–27 (Dep’t Commerce
Feb. 10, 1999) (final results and partial rescission of antidumping duty administrative
through 	January 	31, 	2006 	at 	15–18, 	A-533-850, 	(Sept. 	5, 	2007), 	available 	at
http://ia.ita.doc.gov/frn/summary/india/E7-18006-1.pdf (last visited Mar. 20, 2017) (addressing the
propriety of including expenses attributable R&D, supply, support and chain management,
compensation, and other voluntary retirement schemes in the numerator of the G&A expense
ratio); Issues and Decision memorandum for the Final Determination in the Antidumping Duty
Investigation of Certain Lined Paper Products from India at 9–10, A-533-843, (Aug. 8, 2006),
available at http://ia.ita.doc.gov/frn/summary/india/E6-12811-1.pdf (last visited Mar. 20, 2017)
(addressing why G&A expenses need to reflect company-wide administrative costs and why
certain expenses attributable to non-subject merchandise should not be allocated to G&A, but not
why it is reasonable to allocate those expenses to COGS).
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 38 of 45

Court No. 15-00213 	Page 39
PUBLIC VERSION
review) (treating grants for equipment purchases and loan-restitution payments as offsets
to total G&A expenses where Commerce found they relate to the company’s general
operations)), the court cannot assess the reasonableness of this practice for offsetting
subsidies subsidy income generally or as applied here until Commerce has clarified its
practice of allocating all costs not attributable to company-wide administrative expenses,
including those relating to non-subject merchandise, to COGS. 	Only once Commerce
has clarified the apparent inconsistencies in its allocation of costs in this investigation and
explained the reasonableness of its cost allocation methodology can the court assess if
allocating all non-administrative company-wide expenses to COGS is reasonable and
supported by the record here. The court defers consideration of this issue.
IV. Transfer Prices Paid by Pro-Team to Tollers for Wire Drawing and Nail
Making Services
PT argues that Commerce’s rejection of transfer prices paid by Pro-Team to
affiliated tollers for wire drawing and nail making services performed for Pro-Team is not
supported by substantial evidence because the prices Pro-Team paid to affiliated and
unaffiliated tollers were substantially similar. 	PT Br. 42–44. 	Defendant responds that
Commerce reasonably disregarded transfer prices paid to affiliated tollers because it
determined that the average amount paid to unaffiliated tollers (i.e., average market price)
is greater than the average amount paid to affiliated tollers (i.e., average transfer price).
Def.’s Resp. 42–44. Commerce’s determination is supported by substantial evidence.
In the calculation of CV, the statute permits Commerce to disregard transactions
“directly or indirectly between affiliated persons” if those transactions do not fairly reflect
an arm’s-length price. 	See 19 U.S.C. § 1677b(f)(2). 	If Commerce disregards affiliated
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 39 of 45

Court No. 15-00213 	Page 40
PUBLIC VERSION
party 	transactions 	and 	no 	other 	transactions 	are 	available 	for 	consideration, 	the
determination of the amount shall be based on the information on the record as to what
an 	arm’s-length 	price 	would 	have 	been 	if 	the 	transaction 	had 	occurred 	between
unaffiliated persons. 	Id. 	The statute does not define what it means for affiliated party
transactions to not fairly reflect an arm’s-length transaction. See id.
In order to determine whether affiliated party transactions fairly reflect the market
price for such transactions, Commerce’s practice is to compare the average transfer
prices for affiliated tollers with the average market prices for unaffiliated tollers. See, e.g.,
Polyethylene Retail Carrier Bags From Thailand, 76 Fed. Reg. 12,700 (Dep’t Commerce
Mar. 8, 2011) (final results of antidumping duty administrative review) and accompanying
Issues and Decision Memorandum for the Antidumping Duty Administrative Review of
Polyethylene Retail Carrier Bags from Thailand for the Period of Review August 1, 2008,
through 	July 	31, 	2009 	at 	19, 	A-549-821, 	(Mar. 	1, 	2011), 	available 	at
http://ia.ita.doc.gov/frn/summary/thailand/2011-5267-1.pdf (last visited Mar. 20, 2017)
(“Polyethylene Retail Carrier Bags from Thailand I&D”). 	Where transfer prices (i.e.,
affiliated party transactions) are lower than those made at arm’s length prices (i.e.,
unaffiliated party transactions) on a weighted-average basis, Commerce may disregard
those transactions as not fairly reflecting the amount usually reflected in sales of
merchandise under consideration in the market under consideration. 	See id.; see
generally 19 U.S.C. § 1677b(f)(2).
Here, Commerce reasonably disregarded transactions for low carbon wire drawing
and steel nail making services performed by Pro-Team’s tollers because it found the
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 40 of 45

Court No. 15-00213 	Page 41
PUBLIC VERSION
average market price for such services performed by unaffiliated tollers was higher than
those of affiliated tollers. 34 	Final Decision Memo at 53. 	Commerce did not disregard
affiliated party transactions for coating and wire strip collating services performed by
tollers because it found the average market price for coating and wire strip collating
services performed by affiliated tollers was higher than the price paid to unaffiliated
tollers. 35 See id.
PT argues that Commerce lacked substantial evidence to disregard the transfer
prices paid to affiliated tollers for low carbon wire drawing and steel nail making services
because the prices paid to affiliated tollers and those paid to unaffiliated tollers are
substantially similar. 36 PT Br. 42–43. PT does not contest Commerce’s findings that Pro-
Team paid a higher weighted-average price to unaffiliated tollers than it did to affiliated
tollers for both services. See id. The record therefore indicates that the weighted-average
of the prices paid to affiliated tollers was lower than that paid to unaffiliated tollers for such
34 Commerce compared tolling services purchased by Pro-Team from affiliated and unaffiliated
suppliers, which included wire drawing, nail making, threading, coating, wire strip collating. See
PT Enterprise Cost Verification Rep at 19–20. Commerce determined that for wire drawing of low
carbon steel, the average transfer price paid to affiliated tollers was [[
]] while the average price paid for such services purchased from unaffiliated tollers was
[[ 	]]. Id. at 19. For steel nail making services, the average price paid to affiliated tollers
was [[ 	]] while the average price paid to unaffiliated tollers was [[ 	]]. Id.
35 For coating services, the average price paid to affiliated tollers was [[
]] while the average price paid to unaffiliated tollers was [[ 	]]. PT Enterprise
Cost Verification Report at 19. For wire strip collating services, the average price paid to affiliated
tollers was [[ 	]] while the average price paid to unaffiliated tollers was [[ 	]]. Id. at
20.
36 Specifically, PT argues that, for wire drawing of low carbon steel, the affiliated party transfer
price of [[ 	]] is “only [[ ]] percent less than the [[ 	]] price paid to
the unaffiliated company responsible for [[ 	]] percent of wire drawing.” 	PT Br. 42. 	For nail
making, PT argues “the prices paid to affiliated tollers ([[ 	]] and [[ 	]]) were greater than
prices paid to two unaffiliated tollers ([[ 	]]) and merely [[ 	]] percent less than
the average. Id.
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 41 of 45

Court No. 15-00213 	Page 42
PUBLIC VERSION
services. 	See Final Decision Memo at 53; PT Verification Rep. at 19–20. 	PT does not
argue that Commerce’s practice is unreasonable, and Commerce’s determination to
follow its practice is supported by record evidence here.
In the alternative, PT argues that even if the weighted-average prices paid by Pro-
Team to its affiliated wire drawing and nail making tollers were lower, Commerce abused
its discretion in applying its transactions disregarded practice here because the price
differences were too small to justify rejecting them. See PT Br. 44. A determination by
Commerce is an abuse of discretion if it is clearly unreasonable, arbitrary, or fanciful, is
based on an erroneous conclusion of law, rests on clearly erroneous fact findings, or
follows from a record that contains no evidence on which Commerce could rationally base
its decision. See Gerritsen v. Shirai, 979 F.2d 1524, 1529 (Fed. Cir. 1992). Although the
statute does not require Commerce to disregard transactions that do not reflect non-
arm’s-length transactions between affiliated purchasers, the statute permits Commerce
to do so where the transaction does not fairly reflect an arm’s-length transaction. See 19
U.S.C. § 1677b(f)(2).
PT does not demonstrate why it is unreasonable or arbitrary for Commerce
conclude that even slightly lower weighted-average prices paid to affiliated tollers do not
fairly reflect the amount usually reflected in such transactions. 	Nor does PT point to
affiliated party transactions for other services where the weighted-average transfer price
was lower than for unaffiliated party transactions but Commerce opted not to exclude
such prices. The fact that Commerce elected not to exclude transactions to unaffiliated
tollers for coating or to affiliated tollers for wire strip collating does not demonstrate
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 42 of 45

Court No. 15-00213 	Page 43
PUBLIC VERSION
Commerce’s determination is arbitrary. See Final Decision Memo at 53. For coating and
wire strip collating services performed for tollers, the weighted-average prices for those
services performed by affiliated tollers was higher than for the same services performed
by unaffiliated tollers. 	See PT Cost Verification Report at 19–20. 	Commerce excluded
these transactions because the weighted-average prices paid to unaffiliated tollers is
higher. 	See Final Decision Memo at 53; PT Cost Verification Report at 19–20.. 	It is
reasonably discernible that Commerce determined that higher prices paid to unaffiliated
tollers reflect an arms-length transaction because affiliates that are not pricing their
services at arms-length would reflect lower pricing. See Final Decision Memo at 53; PT
Cost Verification Report at 19–20. PT points to no reason why it is irrational or arbitrary
for Commerce to conclude that slightly lower weighted-average prices paid to affiliated
parties 	reflect 	transactions 	that 	have 	not 	occurred 	at 	arm’s 	length. 	Therefore,
Commerce’s determination to disregard transactions to affiliated tollers performing low
carbon wire drawing and steel nail making services is reasonable and not an abuse of
discretion.
CONCLUSION
For the foregoing reasons, the U.S. Department of Commerce’s final determination
in the investigation of the antidumping duty order covering certain nails from Taiwan is
sustained in part and remanded in part.
The final determination is sustained with respect to Commerce’s determinations:
(1) that Pro-Team is unaffiliated with the [[ 	]] tollers in question; (2) to use the Cohen’s
d test within the differential pricing analysis to determine the existence of a pattern of
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 43 of 45

Court No. 15-00213 	Page 44
PUBLIC VERSION
significant price differences; (3) to use a simple average to calculate the pooled standard
deviation in the Cohen’s d test of the differential pricing analysis; (4) to not offset dumped
sales with non-dumped sales in calculating the respondent’s antidumping duty margin
using the average-to-transaction methodology; and (5) to disregard transfer prices paid
by Pro-Team to certain affiliated tollers in its calculation of normal value (“NV”). The final
determination is remanded with respect to Commerce’s allocation of expenses associated
with Pro-Team’s separate steam line of business.
In accordance with the foregoing, it is hereby
ORDERED that Commerce’s allocation of expenses associated with Pro-Team’s
separate steam line of business for further explanation and consideration consistent with
this opinion. On remand, Commerce must:
(1) Explain its methodology for allocating costs associated with Pro Team’s
separate steam business and explain why that methodology is reasonable or
reconsider its determination, and
(2) Explain how its cost allocation methodology in this case conformed with its
practice or reconsider its determination; and it is further
ORDERED that Commerce shall file its remand determination with the court within
45 days of this date; and it is further
ORDERED that Plaintiff shall have 30 days thereafter to file comments on the
remand determination; and it is further
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 44 of 45

Court No. 15-00213 	Page 45
PUBLIC VERSION
ORDERED that Defendant shall have 15 days thereafter to file a reply to
comments on the remand determination.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: March 23, 2017
New York, New York
Case 1:15-cv-00213-CRK Document 90 Filed 03/30/17 Page 45 of 45