Deacero S.A.P.I. de C.V. et al v. United States

PUBLIC VERSION
Slip Op. 26-56
U	UNITED STATES COURT OF INTERNATIONAL TRADE
DEACERO S.A.P.I. DE C.V. AND
DEACERO USA, INC.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
INSTEEL WIRE PRODUCTS
COMPANY, SUMIDEN WIRE
PRODUCTS CORPORATION, AND
WIRE MESH CORP.,
Defendant-Intervenors.
Before: Joseph A. Laroski, Jr., Judge
Court No. 24-00212
[Denying plaintiffs’ motion for judgment on the agency record and sustaining in full
the final determination of the U.S. Department of Commerce concerning the
anticircumvention inquiry related to the dumping order on prestressed concrete
steel wire strand from Mexico.]
Dated: May 26, 2026
Rhonda Kay Schmidtlein and Jacob A. Laband, Wilmer, Cutler, Pickering, Hale &
Dorr, LLP, of Washington, D.C., argued for plaintiffs Deacero S.A.P.I. de C.V. and
Deacero USA, Inc. On the brief were David J. Ross, Stephanie E, Hartmann, Jacob
A. Laband, and Min Seong Kim.
An Hoang, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., argued for defendant United States
Government. With him on the brief were Brett A. Shumate, Assistant Attorney
General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director.
Of counsel, arguing for defendant, was Brien Charles Stonebreaker Office of Chief
Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of
Washington, D.C. Of counsel on the brief was Spencer Chase Neff, Office of Chief
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Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of
Washington, D.C.
Elizabeth C. Johnson and Matthew Thomas Martin, Kelly Drye & Warren, LLP, of
Washington, D.C., argued for defendant intervenors Insteel Wire Products
Company, Sumiden Wire Products Corporation, and Wire Mesh Corporation. With
them on the brief was Kathleen W. Cannon.
O	OPINION
Laroski, Judge: The action before the court is a motion for judgment on the agency
record pursuant to U.S. Court of International Trade Rule 56.2 filed by plaintiffs
Deacero S.A.P.I. de C.V. (“Deacero Mexico”) and Deacero USA, Inc. (“Deacero USA”)
(collectively “Deacero”). Pl. Mot. for J. on the Agency R., ECF Nos. 28–29 (May 19,
2025) (“Deacero Br.”). Deacero challenges the U.S. Department of Commerce’s
(“Commerce”) final affirmative determination concerning the anticircumvention
inquiry related to the antidumping order on prestressed concrete steel wire strand
(“PC strand”) from Mexico, conducted pursuant to 19 C.F.R. § 51.226(h) and section
781(a) of the Tariff Act of 1930, as amended (“the Act”), codified at 19 U.S.C.
§ 1677j(a) and 19 C.F.R. § 351.226(d)(1). See Prestressed Concrete Steel Wire
Strand from Mexico, 89 Fed. Reg. 79,252 (Dep’t Commerce Sept. 27, 2024) (“Final
Determination”), as amended by Prestressed Concrete Steel Wire Strand from
Mexico: Final Affirmative Determination of Circumvention of the Antidumping
Duty Order, 89 Fed. Reg. 85,844 (Dep’t Commerce Oct. 29, 2024), and accompanying
Issues and Decision Memorandum (“IDM”).
Deacero challenges Commerce’s Final Determination on three grounds.
Deacero argues that: (1) Commerce’s method of comparing Deacero USA’s PC
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strand production to Deacero Mexico’s PC strand production and its inputs is both
contrary to the statutory text and legislative history, and inconsistent with
Commerce’s past practice and record evidence of Deacero’s operations; (2) aided by
erroneously defining PC strand production process in its comparative methodology,
Commerce’s analysis of the five factors in section 781(a)(2) of the Act to determine
whether processing in the United States is “minor or insignificant” is unreasonable;
and (3) Commerce arbitrarily ignored record evidence when considering patterns of
trade. Deacero Br. at 1–42.
Defendant United States (“the Government”) and Defendant-Intervenors
Aluminum Association Trade Enforcement Working Group and its Individual
Members (collectively, “Defendant-Intervenors”), which include Insteel Wire
Products Company, Sumiden Wire Products Corporation, and Wire Mesh
Corporation, maintain that Commerce’s conclusions are supported by substantial
evidence and otherwise lawful. See Def. Resp. in Opp’n to Pl. Mot. for J. on the
Agency R., ECF Nos. 31–32, at 1 (July 23, 2025) (“Gov. Br.”); see also Def.-Int.’s
Resp. in Opp’n to Pl. Mot. for J. on the Agency R., ECF Nos. 33–35, at 12 (Aug. 7,
2025) (“DI Br.”).
For the forgoing reasons, the court denies plaintiffs’ motion and sustains
Commerce’s Final Determination.
B	BACKGROUND
On January 28, 2004, Commerce issued an antidumping duty order on
prestressed concrete steel wire strand from Mexico. Notice of Antidumping Duty
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Order: Prestressed Concrete Steel Wire Strand from Mexico, 69 Fed. Reg. 4,112
(Dep’t Commerce Jan. 28, 2004) (the “Order”). On June 9, 2023, Insteel Wire
Products Company, Sumiden Wire Products Corporation, and Wire Mesh
Corporation filed a circumvention inquiry request alleging that imports of high
carbon steel (“HCS”) wire from Mexico that were further processed into PC strand
in the United States were circumventing the Order. Requestors’ Letter,
“Petitioners’ Request for Circumvention Ruling Pursuant to Section 781(a), as
Amended,” P.R. 1, C.R. 1 (June 9, 2023) (“Circumvention Request”). On July 31,
2023, Commerce initiated a country-wide circumvention inquiry pursuant to section
781(a) of the Act to determine whether imports of HCS wire that are completed or
assembled into PC strand in the United States are circumventing the Order for the
period of inquiry (“POI”) January 1, 2021, through June 30, 2023. Prestressed
Concrete Steel Wire Strand from Mexico: Initiation of Circumvention Inquiry on the
Antidumping Duty Order, 88 Fed. Reg. 49,438, P.R. 13 (Dep’t Commerce July 31,
2023) (“Initiation Notice”). Commerce initially defined the merchandise subject to
the circumvention inquiry as
HCS wire imported from Mexico. The HCS wire has a high carbon
content (
i.e., 0.78–0.85 percent), is not heat treated, and has a diameter
less than 4.50 millimeters. The HCS wire is assembled or completed in
the United States by stranding the HCS wire to produce PC strand of
the type that would be subject to the Order.
Initiation Notice, 88 Fed. Reg. at 49,438. After Deacero “reported that certain of the
HCS wire . . . of the type that would be subject to the Order would not fall [within
the original scope],” Commerce modified the scope of the inquiry, adjusting the
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required level of carbon content from 0.78 percent to 0.60 percent. Antidumping
Duty Order on Prestressed Concrete Steel Wire Strand From Mexico: Preliminary
Affirmative Determination of Circumvention, 89 Fed. Reg. 22,668, P.R. 122 (Dep’t
Commerce Apr. 2, 2024), and accompanying Preliminary Decision Memorandum at
4 n.33 (“Preliminary Determination” or “PDM”).
On September 28, 2023, Commerce issued initial questionnaires to the two
mandatory respondents, Deacero and Aceros Camesa S.A. de C.V. (“Camesa”). 1
PDM at 2. Deacero timely filed responses on October 6, 2023, and October 30, 2023.
Id. Petitioners submitted comments on November 16, 2023, which Deacero
responded to on November 24, 2023. Id. at 2–3.
On April 2, 2024, Commerce published its preliminary affirmative
determination, finding that imports of HCS wire produced in Mexico and assembled
or completed into PC strand in the United States were circumventing the Order. Id.
at 21. Commerce preliminarily found that: (i) the merchandise sold in the United
States was of the same class or kind as the merchandise subject to the order; (ii) PC
strand sold in the United States was completed in the United States from parts or
components produced in Mexico; (iii) the process of assembly or completion in the
United States is minor or insignificant; (iv) the value of the parts and components
produced in Mexico represent a significant portion of the total value of the PC
1 In its Preliminary Determination, Commerce found that Camesa’s U.S. importer sold HCS wire
rope in the United States, which is “not of the same class or kind as the class or kind of merchandise
subject to the Order” and did not have the ability to produce PC strand. PDM at 7. Thus, the
requirements of section 781(a)(1)(A) of the Act were not met and further analysis was unnecessary
with respect to Camesa and its U.S. importer. Id.; 19 U.S.C. § 1677j(a)(1)(A).
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strand sold in the United States; (v) the patterns of trade and sourcing patterns
weighed in favor of an affirmative circumvention determination; (vi) the affiliation
between Deacero Mexico and its wholly owned subsidiary, Deacero USA, weighed in
favor of an affirmative circumvention determination; and (vii) imports of HCS wire
into the United States from Mexico increased following the Order. Id.
On June 14, 2024, Deacero timely submitted an administrative case brief to
Commerce. Deacero Admin. Case Br. to Commerce, P.R. 148, C.R. 190 (June 14,
2024) (“Deacero Admin. Br.”). Petitioners (here, Defendant-Intervenors) submitted
a rebuttal brief on June 27, 2024. IDM at 2. On September 20, 2024, Commerce
issued its Final Determination, affirming its reasoning and conclusions as reflected
in its Preliminary Determination and continuing to find that Deacero’s imports of
HCS strand produced in Mexico and assembled or completed into PC strand in the
United States were circumventing the Order. Id. at 1. The court heard oral
argument on February 11, 2026.
JJURISDICTION AND STANDARD OF REVIEW
This court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(vi) and 28
U.S.C. § 1581(c). Under section 1516a(b)(1)(B)(i) of the Tariff Act of 1930, the court
will hold unlawful Commerce’s determination if it is found “to be unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19
U.S.C. § 1516a(a)(b)(1)(B)(i). Substantial evidence constitutes “such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.”
Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quoting Consol. Edison
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Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial evidence requires
“more than a mere scintilla” of evidence. Id. (quoting Consol. Edison Co., 305 U.S.
at 229). In addition, “[i]t is well-established that an agency’s action must be upheld,
if at all, on the basis articulated by the agency itself.” Motor Vehicle Mfrs. Ass’n of
U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983) (footnote
omitted) (citing Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168
(1962); see SEC v. Chenery Corp., 332 U.S. 194, 196 (1947); see also Am. Textile
Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 539 (1981)). “The substantiality of
evidence must take into account whatever in the record fairly detracts from its
weight.” Universal Camera Corp., 340 U.S. at 488; see Nippon Steel Corp. v. United
States, 458 F.3d 1345, 1351 (Fed. Cir. 2006) (“A reviewing court must consider the
record as a whole, including that which ‘fairly detracts from its weight’, to
determine whether there exists ‘such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.’” (quoting Universal Camera Corp., 340
U.S. at 477–78)).
However, “the [c]ourt will not disturb an agency determination if its factual
findings are reasonable and supported by the record as a whole, even if there is
some evidence that detracts from the agency’s conclusion.” Shandong Huarong Gen.
Corp. v. United States, 159 F. Supp. 2d 714, 718 (CIT 2001) (citing Heveafil Sdn.
Bhd. v. United States, 25 CIT 147, 149 (2001)), aff’d sub nom., Shandong Huarong
Gen. Grp. Corp. v. United States, 60 F. App’x. 797 (Fed. Cir. 2003). Moreover, “the
possibility of drawing two inconsistent conclusions from the evidence does not
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prevent an administrative agency’s finding from being supported by substantial
evidence.” Altx, Inc. v. United States, 370 F.3d 1108, 1116 (Fed. Cir. 2004)
(alteration in original) (quoting Matsushita Elec. Indus. Co. v. United States, 750
F.2d 927, 933 (Fed. Cir. 1984)).
A petitioner seeking to challenge Commerce’s determination must
demonstrate that its preferred evidentiary finding is ‘‘the one and only reasonable’’
outcome on the administrative record, ‘‘not simply that [its preferred finding] may
have constituted another possible reasonable choice.’’ Tianjin Wanhua Co. v.
United States, 179 F. Supp. 3d 1062, 1071 (CIT 2016).
L	LEGAL FRAMEWORK
Circumvention inquiries are governed by section 781 of the Act. 19 U.S.C.
§ 1677j. Commerce may include imported parts and components that are used in
U.S. completion or assembly of subject merchandise within the scope of an AD/CVD
order at any time the order is in effect when the merchandise satisfies the criteria
under section 781(a)(1) of the Act. Id. § 1677j(a)(1).
To find circumvention, Commerce must determine that the process of
assembly or completion in the United States is “minor or insignificant” as compared
to the country subject to the order. Id. § 1677j(a)(1)(C). In determining whether the
process of assembly or completion is minor or insignificant, Commerce considers five
factors: (1) the level of investment in the United States; (2) the level of research and
development in the United States; (3) the nature of the production process in the
United States; (4) the extent of production facilities in the United States; and, (5)
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whether the value of processing performed in the United States represents a small
proportion of the value of the merchandise imported into the United States. Id.
§ 1677j(a)(2). No single factor under section 781(a)(2) of the Act controls. Uruguay
Round Agreements Act, Statement of Administrative Action, H.R.Rep. No. 103-316,
vol. 1, at 4216 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4209 (“SAA”); 2 19
U.S.C. § 1677j(a)(2).
Commerce may include imports of parts or components within the scope of an
orderat any time the order is in effect if, among other things, the value of the parts
and components produced in the foreign country to which the AD/CVD order applies
is a significant portion of the total value of the merchandise sold in the United
States. Id. § 1677j(a)(1)(D). “In determining whether to include parts or
components in a countervailing or antidumping duty order,” section 781(a)(3) of the
Act provides that Commerce “shall take into account” three additional factors,
including: (1) the pattern of trade, including sourcing patterns; (2) whether the
manufacturer or exporter of the merchandise is affiliated with the person who uses
the merchandise to assemble or complete in the foreign country the merchandise
that is subsequently imported into the United States; and (3) whether imports into
the foreign country of the merchandise have increased after the initiation of the
investigation which resulted in the issuance of such order or finding. Id.
§ 1677j(a)(3).
D	DISCUSSION
2 The SAA is an “authoritative expression” of the statute’s meaning. 19 U.S.C. § 3512(d).
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II. 	Commerce reasonably compared Deacero USA’s PC strand production
process to Deacero Mexico’s complete production process
Deacero argues that when Commerce determined that Deacero USA’s
production process is minor or insignificant, Commerce compared Deacero USA’s
production process to Deacero Mexico’s overly extensive production process.
Deacero Br. at 1. Specifically, Deacero contends the complete production process
begins with drawing wire rod, because wire rod is the input, or raw material, for
Deacero’s PC strand; and instead, Commerce “erroneously,” id. at 33, included wire
rod’s production from primary iron and steel inputs into its analysis of Deacero
Mexico’s production. Id. at 1. According to Deacero, the statutory text and
legislative history, the International Trade Commission’s (the “Commission”)
description of the PC strand production process, and record evidence of Deacero
Mexico’s production process demonstrate that Commerce unreasonably defined the
production process in its comparative analysis and render Commerce’s
circumvention determination unreasonable and unlawful. Id. at 1.
The Government argues that Commerce reasonably compared Deacero USA’s
process of stranding HCS wire into PC strand against Deacero Mexico’s production
process for PC strand. Gov. Br. at 12–18.
To determine whether the process of assembly or completion of the inquiry
merchandise in the United States is minor or insignificant pursuant to section
781(a)(1)(C) of the Act, Commerce evaluated the five factors under section 781(a)(2)
as they exist for Deacero USA in comparison to those five factors as they exist for
Deacero Mexico (Commerce’s “comparative methodology”). PDM at 9; 19 U.S.C.
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§§ 1677j(a)(1)(C), (a)(2). Deacero USA uses imported HCS wire sourced from its
operations in Mexico and strands the wire into PC strand at its sole U.S. facility in
Houston, Texas. PDM at 14. Deacero Mexico – which is Deacero USA’s affiliate
and also serves as supplier of the inquiry merchandise (i.e., HCS wire) – operates
several facilities in Mexico, across which, it “perform[s] all aspects of PC strand
production,” id. at 13 (citing Response of Deacero to the Department’s Jan. 12, 2024
Supplemental Questionnaire at 15–17, P.R. 95–97, C.R. 65–159 (Feb. 5, 2024)
(“SQR”)), including the production of wire rod from primary iron and steel inputs,
wire drawing, and the final PC stranding operations (referred to by Commerce as a
“vertically integrated” or “complete” production process or “entire manufacturing
process”). Id.
Commerce reasonably assessed Deacero’s production operations because (A)
the comparative methodology is consistent with the statute; (B) Commerce
reasonably explained why it considered Deacero Mexico’s operations to be
“vertically integrated”; and (C) Commerce is not bound by ITC descriptions of the
PC strand production process.
A	A. Commerce’s comparative methodology is consistent with the statute’s text
and legislative intent
(i) 	Plain language
Deacero argues that the statutory text of section 781(a) of the Act does not
support Commerce’s decision to compare its PC strand production in the United
States to a “complete production process” 3 in Mexico that includes the production of
3 Neither the statute nor its legislative history use or define “complete production process.”
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the parts or components of PC strand (i.e., wire rod) from primary iron and steel
inputs (i.e., steel billets and scrap). Deacero Br. at 1. While this comparison
method has been upheld in the context of section 781(b) of the Act for a process of
assembly or completion in a third country, Deacero contends that Congress
deliberately drafted sections 781(a) and (b) of the Act as separate provisions to
reflect the differences between inquiries into the production processes in the United
States versus those in foreign countries. Id. at 13–14. According to Deacero,
applying a comparative methodology upheld under section 781(b) of the Act in the
section 781(a) context is inconsistent with Congress’s deliberate textual and
structural distinctions. Id.
The Government argues that sections 781(a) and 781(b) of the Act are
“structurally similar, imposing the same general requirements with only minor
differences to account for further assembly in the United States as opposed to a
foreign country.” Gov. Br. at 14 (comparing 19 U.S.C. § 1677j(a) with § 1677j(b)).
The Government contends that under either provision, the statute enables
Commerce to “compar[e] a process of assembly or completion in the United States
against a more comprehensive process of manufacture outside the United States.”
Id. at 13.
In its Preliminary Determination, Commerce explained that
[c]omparing the entire production process for PC strand [i.e. including
the production of wire rod from primary iron and steel inputs] against
the 	production 	process 	for 	finishing 	HRS 	wire 	into 	PC 	strand 	is
reasonable 	in 	the 	circumvention 	context 	because 	it 	is 	relevant 	to
whether a producer would reasonably move its further processing across
borders to avoid the discipline of an order.
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PDM at 15. Commerce did not alter its methodology for its Final Determination
and explained that its comparison of the production process in the United States to
the entire manufacturing process in the subject country (i.e., Mexico) was consistent
with its “established practice,” as judicially affirmed in the context of section 781(b)
of the Act. IDM at 12, 12 n.59 (citing Certain Corrosion-Resistant Steel Products
from the People’s Republic of China: Affirmative Final Determination of
Circumvention Involving the United Arab Emirates, 85 Fed. Reg. 41,957 (July 13,
2020) (comparing the production process for CORE in the UAE with the integrated
steel mill production in China), upheld, Al Ghurair Iron & Steel LLC v. United
States, 536 F. Supp. 3d 1357, 1368 (CIT 2021) (Al Ghurair I), aff’d, 65 F.4th 1351
(Fed. Cir. 2023) (Al Ghurair II)).
Commerce’s definition of the complete production process for PC strand is
consistent with the statute. See 19 U.S.C. § 1677j(a). Neither the statute, nor its
legislative history, prescribe a method Commerce must adopt in either the 781(a) or
781(b) context to compare the production processes in the subject country with the
United States or a third country. Sections 781(a) and (b) of the Act share the title
“Determination of Whether Process Is Minor or Insignificant” and both require
Commerce to analyze the same five factors to determine whether the production
process is “minor or insignificant.” Compare 19 U.S.C. § 1677j(a)(2) with
§ 1677j(b)(2). The only distinction between each section’s five factors is when the
factors refer to the location of completion or assembly. Section 781(a) of the Act
refers to, for example, “the level of investment in the United States,” id.
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§ 1677j(a)(2)(A), while section 781(b) refers to “the level of investment in the foreign
country.” Id. § 1677j(b)(2)(A).
Deacero’s argument that because the text of the statute is different in
sections 781(a) and 781(b) of the Act, Commerce cannot choose methodology to
compare production processes in the home country to the processes in the other
relevant country is inapposite – the text does not state such mandate. Id. Thus,
based on the statute’s plain text, Commerce reasonably relied on having used a
similar comparative methodology in the section 781(b) context when it chose to
include the production of wire rod from primary iron and steel inputs in its analysis
of Deacero Mexico’s complete production process for PC strand. See PDM at 11–12;
IDM at 12–17. 4
((ii) 	Legislative Intent and Purpose
Deacero argues that Commerce cannot lawfully rely on section 781(b)
precedent to justify its comparative methodology because section 781(a) of the Act
“reflects unique congressional intent and purpose.” Deacero Br. at 19; see id. at 14–
19 (referencing SAA at 893–94; S. Rep. No. 103-412, at 81–82). Deacero contends
that Congress was most concerned about importers circumventing AD/ CVD orders
through “screwdriver assembly operations” 5 in the United States. Id. at 15 (quoting
4 See PDM at 11 n.69, 70 for circumvention inquiries in which Commerce used an integrated
production process of the merchandise to determine whether production in the United States or a
third country was minor or insignificant.
5 In a “screwdriver assembly operation” the producer relies on off the shelf components and
circumvents an antidumping duty order “by establishing a screwdriver operation in the United
States that purchases as many parts as possible from a third country.” SAA at 893.
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SAA at 893). Deacero does not identify its operation as a “screwdriver operation,”
id., and, if permitted,
Commerce’s methodology will expand the scope of orders on downstream
steel products to include all imported intermediate steel products,
because the scale of investment in the United States for any given
downstream product will rarely be comparable to the cost of a process
that includes the investment value of a steel mill that creates the
primary iron and steel inputs.
Id. at 14. Deacero argues that such an outcome “undermines congressional intent to
protect legitimate investment in the U.S.,” 6 Deacero Reply at 4, and thus,
Commerce’s method under section 781(b) of the Act cannot be intended to apply to a
section 781(a) inquiry. See id.; see also Deacero Br. at 17 (“The purpose of the
provision is to properly address circumvention while, at the same time, ensuring
that anticircumvention inquiries ‘will not deter legitimate investment,
characterized by the addition of substantial value.’”) (referencing SAA at 894).
According to the Government, the legislative history confirms that Commerce
has flexibility in applying the provisions when defining the production process.
Gov. Br. at 13–14. The SAA, “leaves the choice of methodology within Commerce’s
discretion, providing that Commerce will evaluate § 1677j(a)(2) factors ‘depending
6 Deacero invokes Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024), arguing that the “best
reading” of section 781(a) of the Act would focus on protecting legitimate investment and as such
Commerce’s comparative methodology should analyze the “actual production process for the subject
merchandise from the relevant parts and components, not the production of the parts and
components themselves.” Deacero Reply at 3–4 (citing Loper Bright, 603 U.S. at 400). The question
before this court is not how to interpret an ambiguous statutory provision; it is whether Commerce’s
method is supported by substantial evidence and in accordance with law. The statute’s plain
language directs Commerce to conduct a fact-specific inquiry, and its legislative history repeatedly
affirms the flexibility Commerce enjoys in conducting its circumvention analysis. Deacero goes as
far as to invoke Skidmore deference, id. at 12 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140,
(1944)), but this argument also fails given record evidence of Commerce’s past practice of using an
integrated production process for comparison and its thorough explanation for choosing to do the
same with respect to Deacero Mexico’s production.
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on the particular circumvention scenario.’” Id. at 13 (quoting SAA at 893) (citing
Timken Co. v. United States, 968 F. Supp. 2d 1279, 1286 n.7 (CIT 2014), aff’d, 589
F. App’x 995 (Fed. Cir. 2015) (When a statute “places no other limits on the
methodologies that Commerce may employ . . . it leaves Commerce discretion as to
the choice of methodologies.”) (citation modified). The Government contends that
the SAA’s reference to “screwdriver assembly operations” is merely illustrative and
does not evince an intent to narrow the statute. Id. at 15.
The legislative history does not support Deacero’s distinction between
sections 781(a) and 781(b) of the Act, such that a comparative method under one
provision would be unreasonable or unlawful if applied to an inquiry under the
other. First, when addressing the multi-factor tests for whether assembly or
completion is minor or insignificant, both the SAA and the Senate Report address
sections 781(a) and (b) in conjunction, listing out the shared factors. See, e.g., SAA
at 893–94 (“New sections 781(a)(2) and 78l(b)(2) list the following factors [the five
minor and insignificant factors respectively].”); S. Rep. No. 103-412, at 82 (“781(a)
and (b) require Commerce to consider whether . . . .”). Second, Deacero
unreasonably attempts to limit anticircumvention inquiries to “screwdriver
assembly operations.” See Deacero Br. at 14–15. With respect to “screwdriver
assembly operations” specifically, the SAA states:
Another serious problem is that the existing statute does not deal
adequately with the so-called third country parts problem. 	In the case
of certain products, particularly electronic products that rely on many
off the shelf components, it is relatively easy for a foreign exporter to
circumvent an antidumping duty order by establishing a screwdriver
operation in the United States . . . .
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SAA at 893. The SAA’s language, such as “for example” and “another serious
problem,” demonstrates that the Act’s anticircumvention purpose is not limited to
“screwdriver operations.” Id.; see Hanon Sys. Ala. Corp. v. United States, 794 F.
Supp. 3d 1348, 1357 (CIT 2025) (rejecting the contention that the SAA limits the
circumvention statute to “screwdriver assembly operations”).
Third, the SAA refers to legitimate investment in the context of operations
“in the United States or in third countries.” SAA at 894. 7 Accordingly, concerns
regarding legitimate investment apply to inquiries under both sections 781(a) and
781(b) of the Act. Thus, Deacero’s characterization regarding Congress’s concern for
protecting legitimate investment, as discussed in the SAA, cannot serve as a basis
for determining Commerce’s comparative methodology is unreasonable. See 19
U.S.C. §§ 1677j(a), (b).
Absent statutory language and legislative history directing otherwise,
Commerce reasonably defined Deacero Mexico’s production process and properly
invoked past practice, as judicially affirmed in the context of section 781(b) of the
7 Deacero contends that its production process in the United States resembles that of other domestic
producers, including petitioners (now Defendant-Intervenors). Deacero Br. at 30, 34. However,
Deacero concedes that 	purchase Mexican origin
wire rod to make PC strand,” id. at 34, while Deacero imports HCS wire (i.e., wire rod that has
already undergone the drawing process). Id. at 1–2. The statute also does not direct Commerce to
evaluate domestic producers. See Alloy and Certain Carbon Steel Threaded Rod From the People’s
Republic of China, 89 Fed. Reg. 68,586 (Dep’t Commerce Aug. 27, 2024), and accompanying Issues
and Decision Memorandum at 12 (“The respondents . . . contend that Commerce wrongly compared
the cost of building and operating a steel mill to the cost of threading to reach its conclusion that
threading pins into steel threaded rod constitutes minor or insignificant processing; specifically, they
assert that such a comparison is improper because ‘no one in the domestic industry producing steel
threaded rod . . . owns or operates a steel mill.’ This is an incorrect characterization of the method
by which Commerce assessed the relative value of the processing that takes place following
importation of unthreaded pins.”)
“[[ 	]]
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Act, to explain its decision to compare Deacero USA’s PC strand production to
Deacero Mexico’s complete production process.
B	B. Commerce properly compared Deacero USA’s PC strand production to
Deacero Mexico’s vertically integrated production process
(i) 	The Commission’s description of the production process
As evidence that Commerce erred in defining production processes for its
comparative methodology, Deacero argues that Commerce arbitrarily departed from
an established practice of relying on the Commission’s description of the subject
merchandise’s production process. Deacero Br. at 21–24 (citing e.g., Certain
Uncoated Paper from the People’s Republic of China: Affirmative Preliminary
Determinations of Circumvention of the Antidumping and Countervailing Duty
Orders for Uncoated Paper Rolls, 85 Fed. Reg. 72,624 (Dep’t Commerce Nov. 13,
2020) (“Certain Uncoated Paper”), and accompanying Preliminary Decision
Memorandum at 9 (determining that to support the assertion that the subject-paper
rolls as entered had all the necessary raw materials for uncoated paper sheets, the
petitioners “provided a brochure illustrating [the] production process and the ITC
Final where the ITC described the production process of uncoated paper sheets” );
Ferrovanadium and Nitrided Vanadium From the Russian Federation: Negative
Final Determination of Circumvention of the Antidumping Duty Order, 77 Fed.
Reg. 46,712 (Dep’t Commerce Aug. 6, 2012) (“Ferrovanadium and Nitrided
Vanadium”), and accompanying Issues and Decision Memorandum at 8
(determining, in accordance with the corresponding ITC investigative report, that
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the “processing of Russian vanadium pentoxide into ferrovanadium involves
significant operations”).
Here, the Commission describes PC strand production as consisting of four
stages: drawing wire rod, stranding, stabilizing, and packaging. See ITC
description in Final Investigation Report (January 2021) at I-16. Had Commerce
used the Commission’s description, Deacero contends, Commerce would have found
that Deacero USA performs three of the four steps in the PC strand production
process (all but the drawing of wire rod into HCS wire), and therefore, its
production is not minor or insignificant relative to its wire drawing and PC strand
operations in Mexico. Deacero Br. at 33.
The Government acknowledges that Commerce’s description of the
production process may overlap with the Commission’s description, but argues that
Commerce does not have “a practice of substituting its own findings with those of
the [Commission].” Gov. Br. at 17 (citing IDM at 17 (citing Light-Walled
Rectangular Pipe and Tube from the People's Republic of China, 88 Fed. Reg.
77,283 (Dep’t Commerce Nov. 9, 2023) (“LWRPT”))). Instead, Commerce’s practice
is to “rely on the complete production process.” Id. (quoting IDM at 15).
Deacero’s argument that Commerce is bound by the Commission’s description
of the production process to examine whether a respondent’s production process in
the United States is minor or insignificant is without merit. Commerce addressed
Deacero’s concern in its Final Determination and reasonably explained that it “has
a longstanding practice of evaluating the entire manufacturing process as part of its
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circumvention inquiry analysis, for steel and non-steel products, in determining
whether a process of assembly or completion is minor or insignificant.” IDM at 13
(citations omitted). Furthermore, Commerce’s comparative methodology has been
upheld by this court and affirmed by the Federal Circuit. See e.g., Al Ghurair I 536
F. Supp. 3d at 1368, aff’d, Al Ghurair II, 65 F.4th at 1354.
The circumvention inquiries Deacero relies on as evidence of Commerce’s
purported long-standing practice to rely on the Commission’s production process
definitions demonstrate, at best, that either Commerce has used Commission
reports to substantiate factual premises, or that a Commission description of the
production process has coincided with Commerce’s description. See e.g., Certain
Uncoated Paper, 85 Fed. Reg. at 72,624; Ferrovanadium and Nitrided Vanadium,
77 Fed. Reg. at 46,712.
Past practice, instead, indicates that Commerce already rejected any notion
that the Commission description supersedes or replaces its fact-finding and
supports Commerce’s decision to include the production of PC strand inputs when
conducting its inquiry. In LWRPT, Commerce explained that
[w]hile ITC reports are useful for determining minor finishing processes
for the completion of subject merchandise, regarding the pipe industry,
steel pipe must be produced from steel coil (e.g., HRS). 	Thus, to
determine if entities are circumventing the order, it is reasonable for
Commerce to consider the production process that began in the subject
country. 	The manufacturing process described in ITC reports, which
were issued in a different context for different purposes, are not binding
to Commerce's circumvention analysis, nor do they encompass the entire
manufacturing processes required to produce subject merchandise from
the beginning stages.
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LWRPT at 43. 8 Thus, the fact that Commerce compared Deacero USA’s PC strand
production to a process in Mexico that is more extensive than the Commission’s
description does not render Commerce’s methodology unreasonable or its
determination unsupported by substantial evidence or otherwise unlawful.
((ii) 	Vertically integrated production process
As additional evidence that Commerce acted unreasonably in applying its
comparative methodology, Deacero contends that none of its facilities in Mexico
perform all the steps required to produce PC strand from primary iron and steel
inputs. Hence, Deacero Mexico’s operations are not “fully integrated,” and cannot
constitute a “complete production process” for Commerce’s analysis. Deacero Br. at
15–17. Instead, Deacero insists Commerce should have limited its comparison of
Deacero USA’s PC strand operations to the wire drawing and PC strand operations
performed at one of its facilities in Mexico. See id. at 16. 9
According to the Government, Commerce properly determined that Deacero
Mexico’s facilities were “vertically integrated.” Gov. Br. at 16. The Government
argues that, in determining whether production is vertically integrated for the
8 Commerce need not be entirely consistent with past practice as it is not bound by prior
determinations. See Hyundai Elec. & Energy Sys. Co. v. United States, 15 F.4th 1078, 1089 (Fed.
Cir. 2021) (‘‘We have rejected the notion that Commerce is forever bound by its past practices.
Instead, each administrative review is a separate exercise of Commerce’s authority that allows for
different conclusions based on different facts in the record.’’); see also Save Domestic Oil, Inc. v.
United States, 357 F.3d 1278, 1283–84 (Fed. Cir. 2004) (‘‘[I]f Commerce has a routine practice for
addressing like situations, it must either apply that practice or provide a reasonable explanation as
to why it departs therefrom.”).
9 Like Deacero USA’s facility in Houston, Texas, Deacero’s facility in Morelia, Mexico, “does not produce
its own wire rod; rather, it sources wire rod either from Deacero’s Celaya facility, from
Deacero Br. at 16 (citing Deacero Comments on Petitioners’ Request for Circumvention
Ruling at 13, P.R. 22, C.R. 10 (Sept. 6, 2023)).
[[
]].”
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purposes of a circumvention inquiry, “[t]he relevant question driving the use of
Commerce’s comparative methodology is ‘whether a producer would reasonably
move its further processing across borders to avoid the discipline of an order.’” Id.
(citing IDM at 15). As the Government explained with respect to Deacero, “[a]
foreign producer with multiple factories, which supply each other with inputs, and
which are each owned by the same overall parent would be able to move its
production process across borders, regardless of the factories’ locations.” Id.
Commerce reasonably determined that Deacero’s production process was
vertically integrated for the purpose of its comparative methodology. In its
Preliminary Determination, Commerce explained that while “Deacero’s actual level
of integration is not dispositive in our analysis,” record evidence nonetheless
indicates that Deacero Mexico is vertically integrated. PDM at 12–13 (citations
omitted). When the respondent operates multiple facilities, Commerce noted,
integration does not depend on whether each step in the production process takes
place at a single facility; rather, it depends on whether there is “a common
ownership and supply of inputs between the facilities.” Id. at 14. Commerce
considered record evidence submitted by Deacero, which, according to Commerce
indicated that “during both the comparison and inquiry periods, it operated
facilities in Mexico that perform all aspects of PC strand production, from steel
melting, casting, hot rolling, wire drawing and the final PC stranding operations.”
Id. at 13. Commerce thus reasonably determined “[t]he fact that Deacero [Mexico]
produces PC strand in its Morelia facility from (in part) wire rod produced in its
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Celaya facility, is sufficient to consider its operations vertically integrated.” Id. at
14.
Furthermore, Commerce’s definition of “vertically integrated production” is
consistent with past practice judicially affirmed by this court. See e.g., Al Ghurair I
536 F. Supp. 3d at 1368, aff’d, Al Ghurair II, 65 F.4th 1351 (affirming the
comparison to integrated steel mills because “the statute does not outline a specific
methodology for Commerce to determine whether the level of investment is minor or
insignificant”).
III. 	Commerce’s determination that Deacero USA’s production process is
minor or insignificant is supported by substantial evidence and otherwise
lawful
Section 781(a)(2) of the Act requires Commerce to weigh five factors, based on
a totality of the circumstances, to determine whether Deacero USA’s process of
production or assembly of PC strand from Mexican-origin HCS wire is minor or
insignificant. 19 U.S.C. § 1677j(a)(2). Deacero argues that Commerce’s “erroneous
[comparative] methodology infects Commerce’s analysis of each of the five factors.” 10
Deacero Br. at 2.
The Government argues that rather than engage with the merits of
Commerce’s factual determinations, Deacero merely “argues what Commerce
should have done had it adopted Deacero’s preferred analytical framework.” Gov.
Br. at 19 (citing Luoyang Bearing Factory v. U.S., 26 C.I.T. 1156, 1173 (CIT 2002)
10 Deacero’s argument that Commerce erred in comparing its production of PC strand in the United
States to an integrated process in Mexico that includes the production of PC strand from primary
iron and steel inputs have been addressed in Section I and will not be repeated here.
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(“[A] party ‘may not usurp Commerce’s role as fact-finder and substitute [Deacero’s]
analysis for the result reached by Commerce.’”)). 11
All five factors are at issue: (A) level of investment; (B) research and
development; (C) nature of the production process; (D) extent of production
facilities; and (E) value of the processing performed in the United States. 19 U.S.C.
§§ 1677j(a)(2)(A)–(E).
A	A. Level of investment in the United States
Deacero contends that Commerce ignored record evidence of significant U.S.
investments, which, if properly considered, should have weighed against a finding
that Deacero USA’s level of investment is minor or insignificant. Deacero Br. at 31.
For example, Deacero notes that it invested approximately 	for its PC
strand production at its facility in the United States. Id. (citing Prelim. Analysis
Memo at 4).
The Government responds that rather than contest the merits of Commerce’s
findings, Deacero simply asserts that its investments in its sole U.S. facility “weigh
against a finding that its U.S. process is minor or insignificant.” Gov. Br. at 19
(citing Deacero Br. at 31).
11 The Government argues that Deacero has inadequately challenged Commerce’s findings and thus
its arguments should be deemed waived. Gov. Br. at 19 citing United States v. Great Am. Ins. Co.,
738 F.3d 1320, 1328 (Fed. Cir. 2013) (“It is well established that arguments that are not
appropriately developed in a party’s briefing may be deemed waived.”). This court disagrees.
Deacero contests Commerce’s use of a complete production process for PC strand that includes the
production of wire rod. According to Deacero, Commerce’s “erroneous methodology infects
Commerce’s analysis of each of the five factors underlying its determination that Deacero’s PC
strand production process in the United States is ‘minor or insignificant.’” Deacero Br. at 2. In its
Reply, Deacero reiterates that Commerce ignored record evidence, that “when evaluated against
these five factors, demonstrates that Deacero is not engaged in circumvention and that Deacero
USA’s PC strand production process resembles that of other U.S. PC strand producers.” Deacero
Reply at 19. Thus, this court finds that Deacero has not waived its arguments.
[[ 	]]
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In its Preliminary Determination, Commerce explained that because Deacero
only performs the final stages of PC strand production in the United States, it was
“appropriate to compare the investment by Deacero USA in PC strand production in
the United States to the investment in the integrated production process of HCS
wire at Deacero’s integrated steel mill in Mexico.” PDM at 10 (citing Prelim.
Analysis Memo at 3–5). Accordingly, Commerce compared the value of investment
required to restart PC strand production in 2021 at Deacero USA’s Houston facility
with the investment required for the entire production process in Mexico. 12 Id.
From the evidence Deacero submitted, Commerce determined that “Deacero’s level
of investment in the United States used to complete the production of PC strand
from Mexican-origin HCS wire is minor compared to the level of investment, both in
terms of initial capital and equipment, required in Mexico to produce HCS wire
from basic inputs.” Id. at 15.
In its Final Determination, Commerce affirmed its finding and responded to
Deacero’s concern that Commerce had overlooked evidence of investments made in
other operations in the United States. IDM at 18. Commerce explained that
investments unrelated to Deacero’s PC strand production were “irrelevant” to its
circumvention analysis. Id.
Commerce reasonably determined that the level of investment in the United
States weighed in favor of a finding that the process of assembly or completion in
the United States is minor or insignificant. In its Preliminary Determination,
12 By “restart” Commerce refers to the investment needed to resume PC strand production in the
United States [[ 	]].
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Commerce thoroughly explained the relevance of considering the level of investment
for an integrated production process in Mexico. PDM at 11–15. In its Final
Determination, Commerce reiterated the rationale for applying its comparative
methodology. IDM at 14–15. Likewise, Commerce addressed and rejected
Deacero’s concern that Commerce had impermissibly ignored evidence of significant
investments in making its finding, explaining that “these investments are not
related to the production of PC strand and are, therefore, irrelevant to our
analysis.” Id. at 18.
B	B. Research and development in the United States
Deacero contends Commerce unreasonably concluded that the level of
research and development (“R&D”) at its facility in Houston weighed in favor of an
affirmative circumvention finding despite record evidence that neither its U.S. nor
its Mexican facilities expended a significant amount on R&D. Deacero Br. at 31–32
(citing IDM at 17–19). Deacero argues that Commerce’s analysis is inconsistent
with its approach towards other section 781(a)(2) factors such as level of
investment, nature of the production process, and extent of production facilities. Id.
Deacero asserts that Commerce analyzes those factors as they exist in the United
States and makes a comparison to the factors as they exist in the home country. Id.
Had Commerce evaluated R&D on relative terms, the comparable R&D
expenditures between Deacero USA and Deacero Mexico should have weighed
against a minor or insignificant finding. Id.
The Government rejects Deacero’s characterization of Commerce’s analysis.
According to the Government, Commerce did compare the level of R&D in the
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United States to that in Mexico, from which it concluded that Deacero USA’s
expenditures were minor. Gov. Br. at 20–21 (citing IDM at 18). Commerce’s
finding was based on Deacero’s own reporting that it
at its U.S. facility and 	at
its Mexican facility. Id. at 6–7 (citing Prelim. Analysis Memo at 5), 21.
In its Preliminary Determination, Commerce found that the minimal R&D at
Deacero USA’s Houston facility weighed in favor of finding that assembly or
completion was minor or insignificant. PDM at 15. In its Final Determination,
Commerce rejected Deacero’s argument that the low amount of R&D across both its
U.S. and Mexico operations weighed against the affirmative finding. IDM at 18.
Commerce reaffirmed that “low levels of R&D weigh in favor of finding the process
of assembly or completion to be minor or insignificant.” Id. (citing Prelim. Analysis
Memo at 6 (citations omitted)).
Both Commerce’s analysis of R&D and its conclusion that Deacero USA’s
level of R&D weighed in favor of a finding that assembly or completion was minor or
insignificant are reasonable. Deacero seemingly argues that because R&D is
negligible in both its U.S. and Mexican facilities, Commerce should not have
determined that this factor weighed in favor of a finding that Deacero USA’s
production is minor or insignificant. Nothing in the statute or its legislative history
directs Commerce to analyze R&D in such a way. Additionally, as Commerce
indicated in its Final Determination, its analysis is consistent with past practice.
See, e.g., Antidumping and Countervailing Duty Orders on Certain Collated Steel
[[
]] 	[[ 	]]
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Staples from the People's Republic of China: Preliminary Affirmative
Determinations of Circumvention With Respect to the Kingdom of Thailand and the
Socialist Republic of Vietnam, 88 Fed. Reg. 57,931 (Dep’t Commerce Aug. 24, 2023),
and accompanying Preliminary Decision Memorandum for Vietnam at 20 (finding
that the lack of R&D expenditures reported by the respondent in a section 781(b)
inquiry weighed in favor of a finding that assembly or completion in the third
country was minor or insignificant); Carbon and Alloy Steel Threaded Rod from the
People’s Republic of China: Affirmative Preliminary Determination of
Circumvention of the Antidumping and Countervailing Duty Orders, 89 Fed. Reg.
18,600 (Dep’t Commerce Mar. 14, 2024), and accompanying Preliminary Decision
Memorandum at 13 (finding that respondent reported zero costs for R&D in a
section 781(a) inquiry and so this factor weighed in favor of a determination that
assembly or completion in the United States was minor or insignificant). Therefore,
Commerce reasonably considered record evidence that Deacero USA and Deacero
Mexico incurred minimal expenses for R&D, as well as its own past practice, to
conclude that this factor weighed in favor of a finding that the process of assembly
or completion in the United States was minor or insignificant.
C	C. Nature of the production process in the United States
According to Deacero, Commerce’s determination that Deacero USA only
performs the “final stages” in PC strand production is based on an erroneous
definition of the production process. Deacero Br. at 34 (quoting PDM at 14; IDM at
18). Of the four steps in PC strand production described by the Commission
(drawing, stranding, stabilizing, and packaging), record evidence shows that
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Deacero USA’s Houston facility performs all but the drawing step, which Deacero
contends is “relatively unsophisticated and minor.” Id. at 33. Deacero argues that
Commerce’s unreasonable comparative methodology has broader negative
implications because “[m]ost if not all of the domestic producers” do not produce PC
strand from primary iron or steel inputs. Id. at 34. 13
The Government argues that Deacero “dramatically overstates,” Gov. Br. at
20, Commerce’s finding because in addition to the nature of the production process,
Commerce considers four other factors under section 781(a)(2) of the Act and
additional factors under section 781(a)(3) of the Act. Id. (citing 19 U.S.C.
§§ 1677j(a)(2)–(3)). In response to Deacero’s point that several domestic producers
purchase Mexican-origin wire rod for PC strand production, the Government
contends that Deacero has not “articulate[d] what bearing that finding should have
on Commerce’s finding.” Id.
In Al Ghurair I, the court clarified that when evaluating the reasonableness
of Commerce’s inquiry into the nature of the production process “[t]he statute does
not direct the court to evaluate the number of stages involved in a production
process.” Al Ghurair I, 536 F. Supp. 3d at 1371, aff’d, Al Ghurair II, 65 F.4th at
1361 (citing 19 U.S.C. § 1677j(b)(2)(C)). As this court recognized, “a seemingly
extensive operation may nonetheless be minor in the context of the overall process
of manufacturing a product — depending on the nature of that product.” Id.
13 As previously indicated, Deacero’s argument that Commerce’s finding is “overbroad” is unavailing.
Deacero has not stated that the statute’s plain language or its legislative history requires Commerce
to consider domestic producers.
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(citation modified) (citation omitted). Thus, Deacero’s suggestion that because three
of the four steps for PC strand production – according to the Commission’s
description – are performed in the United States, the nature of Deacero USA’s
production process cannot be considered minor or insignificant, is unavailing.
In support of its preliminary finding about the nature of the production
process in the United States, Commerce observed Deacero USA’s production process
converting HCS wire into PC strand, which involves: a stranding machine used to
wind HCS wires; the twisted steel cable is stabilized and tensioned, and then wound
on a jumbo metal coiler; a sample from each jumbo coil is inspected and tested at an
on-site laboratory; and jumbo coils are rewound into smaller coils and prepared for
delivery. PDM at 16 (citations omitted). For comparison, Commerce considered the
production across three of Deacero’s facilities in Celaya, Mexico, which includes: the
collection and sorting of scrap; scrap is melted for production of billets produced in
Deacero’s steel mill; billets are rolled into wire rod; HCS wire rod undergoes a
drawing process to be converted into HCS; and PC strand is wound and stabilized
from the HCS wire. Id. Commerce preliminarily determined
[g]iven that Deacero USA’s production stages . . . only involve processing
the HCS wire into PC strand (rather than also making the HCS wire
from wire rod and/or the wire rod from basic inputs), . . . the nature of
Deacero USA’s production process in the United States weighs in favor
of finding that the process of assembly or completion in the United
States is minor or insignificant.
Id.
In its Final Determination, Commerce rejected Deacero’s contention that, had
Commerce limited its comparison with Deacero Mexico’s operations to the four steps
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described by the Commission, Commerce would have found that Deacero USA
performs three of the four which would have weighed against Commerce’s
affirmative finding. IDM at 18–19. Commerce reiterated its basis for comparing
Deacero USA’s level of production to Deacero Mexico’s complete production process.
Id. at 12–17.
Notwithstanding Deacero’s assertion that it performs most of the steps to
produce PC strand as described by the Commission in the United States, Commerce
reasonably explained the basis for including Deacero Mexico’s production of wire
rod. See id. at 18–19. Based on record evidence, Commerce reasonably found that
Deacero USA only performed the final stages in PC strand production, which
weighed in favor of finding that assembly or completion in the United States was
minor or insignificant.
D	D. Extent of production facilities in the United States
Deacero contends that Commerce erred by including Deacero Mexico’s
“facilities and machines . . . for the production of billets, wire rod, and wire
products” in its comparative methodology. Deacero Br. at 35 (quoting PDM at 16–
17; IDM at 19). Deacero argues that its operations in Mexico are “relatively less
complex” than those it conducts in the United States, and its facilities are also used
to produce other products aside from PC strand. Id. at 36. Deacero reiterates that
the only step of PC strand production not performed in the United States is the
drawing stage which it describes as relatively “rudimentary and preparatory”;
whereas the remaining steps are “significantly more complex and capital intensive,”
and “impart the essential character” to the PC strand. Id. at 35.
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In response, the Government reiterates that Deacero cannot usurp
Commerce’s role as factfinder. Gov. Br. at 19 (citing Luoyang, 26 C.I.T. at 1173).
In its Preliminary Determination, Commerce considered evidence supplied by
Deacero USA regarding its number of workers, the size of its Houston facility, a list
of assets required for its PC strand production, and its annual production capacity.
PDM at 16. For Deacero Mexico, Commerce considered evidence of the number of
workers, the size of its several facilities in Mexico, a list of assets, and the
production capacity for PC strand, HCS wire, wire rod, and steel billets. Id. at 16–
17; Prelim. Analysis Memo at 8–9 (citation omitted). Commerce preliminarily
determined that the extent of Deacero USA’s production weighed in favor of a
finding that assembly or completion in the United States was minor or insignificant.
PDM at 16–17.
In its Final Determination, Commerce rejected Deacero’s contentions that
given the comparable PC strand production capacity between Deacero USA and
Mexico, as well as the fact that Deacero USA’s facility is also used for producing
products other than PC strand, the “extent of production facilities” factor supports a
negative determination. IDM at 19. Commerce explained that the production of
other products at Deacero USA’s facilities was irrelevant for the purposes of
Commerce’s analysis. Id. Additionally, Deacero’s evidence of comparable PC strand
production capacity overlooked “its facilities and machines in Mexico for the
production of billets, wire rod, and wire products” (i.e., the extent of production for
an integrated PC strand production process). Id. Commerce continued to find that
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the extent of production facilities in the United States weighed in favor of a finding
that the process of assembly or completion in the United States was minor or
insignificant. Id. Commerce reasonably conducted its fact-finding, explained the
record evidence that factored into its analysis, and responded to Deacero’s concerns
in its Final Determination.
E	E. Value of the processing performed in the United States
Deacero argues that Commerce miscalculated the value added by Deacero
USA’s processing to the value of the merchandise. Deacero Br. at 36. According to
Deacero, when Commerce added Deacero USA’s reported costs for “direct materials,
direct labor, factory overhead, packing, selling, general and administrative expenses
(SG&A), and net interest expense” to the value of the imported HCS wire,
Commerce undervalued Deacero USA’s process to transform the imported HCS wire
into PC strand. Id. (citing Prelim. Analysis Memo at 10; IDM at 20). Deacero notes
that Commerce calculated the value of HCS wire Deacero USA imports from Mexico
as 	percent of the total value of the PC strand Deacero sells in the United
States. Id. at 36–37. Consequently, Deacero contends that the value of Deacero
USA’s processing of Mexican-imported HCS wire into PC strand must be closer to
percent, not the much smaller percentage Commerce found 	percent)
(i.e., the sum of the value added by Deacero USA’s processing and the value of HCS
wire should equal 100 percent). Id.
The Government argues that Commerce calculated the value of Deacero
USA’s processing and its Mexican-imported HCS wire under different statutory
provisions. Gov. Br. at 21–22 (referring to 19 U.S.C. §§ 1677j(a)(1)(D), (2)(e)).
[[ 	]]
[[ 	]] 	([[ 	]]
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According to the Government, values calculated pursuant to different statutory
provisions need not equal 100 percent as Deacero suggests. Id.
Defendant-Intervenors add that “[t]he statute does not provide any specific
methodology for Commerce to follow in making this calculation.” DI Br. at 15.
Furthermore, Defendant-Intervenors contend that Commerce’s calculation method
is consistent with Hanon, in which this court “upheld as ‘reasonable’ a calculation
for third-country processing value which added to the cost of production ‘labor, fixed
and variable overhead, selling, general, and administrative items, and interest, and
divided the sum by the per-unit weighted-average value of the mandatory
respondents’ U.S. sales of inquiry merchandise.’” Id. at 15–16 (citing Hanon 794 F.
Supp. 3d at 1362).
To calculate the value added to the imported HCS wire through processing in
the United States, Commerce summed the per-unit, weighted-average costs for
labor, factory overhead, and packing for the inquiry period, and divided the sum by
the per-unit, weighted-average value of Deacero USA’s sales of inquiry merchandise
in the United States during the inquiry period. PDM at 17. Commerce
preliminarily found that the value of processing performed by Deacero USA
represented a small percentage of the value of the PC strand sold in the United
States, which weighed in favor of a finding that the process of assembly or
completion in the United States was minor or insignificant. Id. at 18.
In its Final Determination, Commerce repudiated Deacero’s concern that its
calculations implicitly inflated the value of imported HCS wire. Commerce
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explained that section 781(a)(2)(E) of the Act values the processing performed, not
the value of the HCS wire itself. IDM at 20. Moreover, Commerce emphasized that
its calculations were made “based only on Deacero’s self-reported costs for labor,
factory overhead (direct and indirect), and packing” and were consistent with
calculations in prior circumvention inquiries. Id. at 20 n.114 (citations omitted).
Commerce continued to find that the value of the processing performed in the
United States “is a small proportion of the value of the merchandise sold in the
United States, weighing in favor of finding that the process of assembly or
completion in the United States is minor or insignificant.” Id. at 20; see 19 U.S.C.
§ 1677j(2)(e).
Commerce’s approach was reasonable, and its determination is supported by
substantial evidence. See Al Ghurair I, 536 F. Supp. 3d at 1374–75 (citing Nucor
Corp. v. United States, 414 F.3d 1331, 1341 (Fed. Cir. 2005) (explaining that the
court need not engage in expansive discussion or weigh in on Commerce’s formula,
the court’s task is to determine that statutory requirements have been met)), aff’d,
Al Ghurair II, 65 F. 4th at 1351. Commerce thoroughly explained the basis for its
calculations and addressed Deacero’s concern that the method inflated the value of
imported HCS wire. See IDM at 20–21.
IIII. 	Commerce reasonably calculated the value of HCS wire under 19 U.S.C.
§1677j(a)(1)(D) using constructed value
Deacero contends Commerce unreasonably valued the imported HCS wire by
using a constructed value (“CV”) in its calculation instead of Deacero’s reported
sales value. Deacero Br. at 8–9 (citing Deacero Admin. Br. at 19–22). Deacero
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argues that Commerce’s calculation “implicitly inflates” the value of the HCS wire
Deacero imports from Mexico, thereby resulting in an improper calculation for the
value added by Deacero’s processing in the United States. Id. at 36.
The Government contends that for calculations under sections 781(a)(2)(E)
and 781(a)(1)(D) of the Act, “Commerce followed its regulation at 19 C.F.R.
§ 351.226(h) in deriving the value of merchandise from the cost of production.” Gov.
Br. at 22 (citing 19 U.S.C. §§ 1677j(a)(1)(D), (2)(E)).
Under section 781(a)(1)(D) of the Act, Commerce may include imports of
parts or components within the scope of an order if the value of the parts and
components produced in the foreign country to which the order applies “is a
significant portion of the total value of the merchandise sold in the United States.”
19 U.S.C. § 1677j(a)(1)(D). To calculate the value of the HCS wire produced in
Mexico, Commerce,
divided the per-unit value of the HCS wire produced in Mexico by the
per-unit, weighted-average value of the PC strand it produced and sold
in the United States during the inquiry period (
i.e., January 2021
through June 2023).
PDM at 18. Commerce valued the imported HCS wire using a CV as described in
section 773(e) of the Act, and pursuant to 19 C.F.R. § 351.226(h). Id. (citing 19
U.S.C. § 1677b(e); 19 C.F.R. § 351.226(h)). Commerce calculated a CV for the HCS
wire by adding the value of the Mexican-produced HCS wire used by Deacero USA
for PC strand production to Deacero Mexico’s “reported costs during the inquiry
period for direct materials, direct labor, factory overhead, packing, selling, general
and administrative (SG&A), net interest expense, and profit.” Id. at 18. Commerce
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preliminarily determined that the value of the HCS wire produced in Mexico
represented a significant portion of the total value of PC strand sold in the United
States, which supported an affirmative finding of circumvention. Id.
In its case brief before Commerce, Deacero argued that Commerce should
have used Deacero’s declared value for its HCS wire imports rather than a CV
because “the Act establishes a preference for using actual sales values where
available, instead of CV.” IDM at 22 (quoting Deacero Admin. Br. at 21–22).
Commerce responded in its Final Determination that it only uses actual sales value
“when such values are reliable and reflect market value.” Id. Commerce explained
that Mexico’s status as a market economy and the affiliation between Deacero USA
and its importer, Deacero Mexico, justified using a CV instead of Deacero’s self-
reported sales value. Id.
Commerce reasonably determined that the value of the HCS wire represents
a significant portion of the total value of PC strand sold in the United States using a
CV for Deacero’s Mexican-imported HCS wire. According to section 351.226(h) of
Commerce’s regulations, the use of CV is discretionary,
[i]n determining the value of parts or components (including such
purchases from another person) under section 781(a)(1)(D) of the Act, or
of processing performed (including by another person) under section
781(a)(2)(E) of the Act, the Secretary may determine the value of the
part or component on the basis of the cost of producing the part or
component under section 773(e) of the Act.
19 C.F.R. § 351.226(h); see IDM at 22. Commerce’s finding that the cost of
production of the HCS wire was higher than Deacero’s reported value and the
fact that Deacero USA is affiliated with the party it purchases the HCS wire
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from (i.e., Deacero Mexico), supports the decision to use a CV. Id.
Accordingly, Commerce reasonably found that the value of the HCS wire
represented a significant percentage of the PC strand sold in the United
States, which in turn, reasonably supported an affirmative final
determination of circumvention. Id. at 23.
IIV. 	Commerce’s patterns of trade analysis is supported by substantial
evidence and in accordance with law
Deacero argues Commerce’s determination regarding patterns of trade is
arbitrary, unsupported by substantial evidence, and unlawful because Commerce
failed to consider “contrary evidence that undermined its conclusion.” Deacero Br.
at 38 (citing Lingyi Chengen Imp. and Exp. Co. v. United States, 391 F. Supp. 3d
1283, 1292 (CIT 2019) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (“An agency acted in an arbitrary and
capricious manner if it ‘entirely failed to consider an important aspect of the
problem [or] offered an explanation for its decision that runs counter to the evidence
before the agency . . . . ’”))). Deacero contends that Commerce arbitrarily selected
inquiry and comparison periods based on petitioners’ suggestion, which were
“gerrymandered to ensure Commerce would find an increase in imports.” Id. at 38.
Additionally, Deacero argues that Commerce “willfully ignores” “highly material,”
id. at 41, evidence demonstrating that “[w]hat Commerce purports to be an
‘increase’ in imports is, in fact, a resumption of the normal pattern of trade.” Id. at
38. Consequently, Commerce failed to meet its obligation to conduct an impartial
investigation. Deacero Reply at 20.
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Deacero acknowledges that neither the statute nor Commerce’s regulations
mandate a specific timeframe that Commerce must use to evaluate Deacero’s
imports, nor does the statute bear a scienter requirement. Deacero Br. at 37, 41. In
Deacero’s view, when there is record evidence suggesting that the changing trade
patterns are not a result of circumvention, it is unlawful for Commerce to make an
affirmative circumvention determination that only considers data from the
petitioners’ purposefully narrow timeframe while “summarily dismissing,” id. at 39,
contradictory evidence that the patterns of trade “are not the result of attempts to
circumvent the Order.” Id. at 40; see Deacero Reply at 20–22.
According to the Government, Commerce’s determination that the increase in
HCS wire imports from Mexico supported an affirmative circumvention should be
upheld. Gov. Br. at 22. The Government contends Commerce reasonably selected
its comparison and inquiry periods based on when petitioners alleged the
circumvention to have begun. Id. at 23 (citing IDM at 24). The Government also
asserts that the statute does not require Commerce to consider a respondent’s
intent to circumvent, and thus, Commerce acted reasonably by not considering
evidence of the reason motivating Deacero’s changing trade patterns. Id. at 22–23.
Defendant-Intervenors reinforce the Government’s position contending that
“Commerce properly declined to consider the timing of, and reasons for, Deacero’s
production of PC Strand in the United States as part of its analysis of the patterns
of trade.” DI Br. at 18.
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To determine whether to include parts or components within the scope of an
AD/CVD order, Commerce “shall consider” additional factors including “the pattern
of trade, including sourcing patterns” and “whether imports into the United States
of the parts or components produced in such foreign country have increased after
the initiation of the investigation which resulted in the issuance of such order or
finding.” 19 U.S.C. §§ 1677j(a)(3)(A), (C).
For “pattern of trade, including sourcing patterns,” Commerce first reviewed
U.S. import statistics provided by petitioners for PC strand imported from Mexico
between 2019 and 2022. PDM at 19; 19 U.S.C. § 1677j(a)(3)(A). Commerce found
“no imports during the comparison period (
i.e., January 2019 through December
2020) and during the inquiry period (
i.e., January 2021 through December 2022)”;
meanwhile imports of PC strand from the rest of the world increased by 5.08
percent. PDM at 19. Commerce preliminary determined that these findings “[did]
not indicate a shift away from Mexican exports to the United States of PC strand,”
id., and thus weighed against circumvention. Id.
Second, Commerce examined U.S. import statistics provided by petitioners of
HCS wire imports and found
[the quantity of] imports of HCS wire from Mexico into the United States
was 9,064 short tons during 2019 and 2020 and 15,148 short tons in
2021 and 2022, which is an increase of 67.1 percent. 	In contrast, the
quantity of U.S. imports of HCS wire from the rest of the world was
30,041 short tons in 2019 and 2020, and 34,598 short tons in 2021 and
2022, an increase of just 15.2 percent.
Id. These import statistics weighed in favor of finding circumvention. Id. Third,
Commerce evaluated evidence Deacero submitted regarding the value and volume
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of Deacero’s PC strand shipments to Mexican, U.S., and third country markets from
July 2018 through June 2023. Id. Commerce identified a shift in the pattern of
trade, which weighed in favor of finding circumvention. Id. Commerce found that
its analysis under section 781(a)(3)(A) of the Act supported a preliminary
affirmative determination of circumvention. Id.; 19 U.S.C. § 1677j(a)(3)(A).
Next, Commerce considered whether imports of the HCS wire from Mexico to
the United States had increased during the inquiry and comparison periods. PDM
at 20; 19 U.S.C. § 1677j(a)(3)(C). Commerce evaluated the official import statistics
provided by petitioners for the value of U.S. imports of HCS wire as well as Deacero
USA’s purchases of HCS wire during the inquiry and comparison periods. PDM at
20. Commerce preliminarily identified an increase in purchases of HCS wire since
the Order. PDM at 20. Pursuant to section 781(a)(3)(C) of the Act, Commerce’s
analysis weighed in favor of a preliminary affirmative determination. Id.; 19 U.S.C.
§ 1677j(a)(3)(C).
In its Final Determination, Commerce addressed Deacero’s concerns that
Commerce had arbitrarily selected its inquiry and comparison periods while
ignoring record evidence of the “true reason” for the increase in PC strand
production following the imposition of the Order 	IDM at
24. With respect to section 781(a)(3)(C) of the Act, Commerce explained that “an
inquiry period that accurately reflects the start of the alleged circumvention activity
of an AD or CVD order and is after the initiation of the investigation which resulted
([[ 	]]).
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in the issuance of such order or finding” satisfies its requirements under section
781(a)(3)(C) of the Act. Id. (citation modified); 19 U.S.C. § 1677j(a)(3)(C).
Commerce acted reasonably by choosing its inquiry period based on when
petitioners alleged circumvention to have begun and by selecting a comparison
period of equal length. See Al Ghurair I, 536 F. Supp. 3d at 1380 (affirming
Commerce’s use of dates identical in length for inquiry and comparison period
selections for analysis under sections 781(b)(3)(A) and (C) of the Act), aff’d, Al
Ghurair II, 65 F.4th at 1358–59. In its Final Determination, Commerce provided a
reasonable basis for its selected timeframe explaining that “[d]efined periods of
inquiry and comparison based around when circumvention was most likely to occur
allow Commerce to efficiently conduct a circumvention inquiry and evaluate the
activity that is alleged to constitute circumvention.” IDM at 24.
Deacero’s assertion that Commerce unlawfully failed to consider record
evidence that provided context for the import data misstates both the record and
the law. In its Final Determination, Commerce explained that the evidence is
“immaterial,” id., to its analysis because the statute does not require Commerce to
evaluate petitioners’ motivations in filing a circumvention request or the reason for
a change in trade patterns. Id. at 24–25.
Declining to consider the reasons behind changing trade patterns when
considering additional factors under section 781(a)(3) of the Act is consistent with
Commerce’s past practice. In Al Ghurair I, the respondent argued that it made its
initial investment “prior to the initiation of investigations that resulted in the
2016
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CORE Orders,” therefore demonstrating a lack of intent to circumvent. Al Ghurair
I, 536 F. Supp. 3d at 1366, aff’d, Al Ghurair II, 65 F.4th at 1359–60. This court,
nonetheless, upheld Commerce’s determination as reasonable, explaining that “the
statute does not provide for consideration of the sequencing of establishment of
operations relative to an AD/CVD order.” Id. at 1369–70.
To demonstrate a lack of intent to circumvent, Deacero points to record
evidence of its own operations’ sequencing, including evidence of its U.S. PC strand
production before the circumvention inquiry began. See Deacero Br. at 41. Deacero
also highlights that it moved equipment for PC strand production from a facility in
Mexico to the United States in order to resume normal production following a
temporary pause, not because Deacero intended to circumvent the Order. See id. at
39. Still, the existence of record evidence that can provide context for shifting trade
patterns does not alter Commerce’s analysis under the statute. Section 781(a)(3) of
the Act requires Commerce to consider, among other things, the patterns of trade,
including sourcing patterns, and whether there has been an increase in imports of
the parts or components, without regard to any underlying motivation or intent. 19
U.S.C. §§ 1677j(a)(3)(A), (C). Thus, consistent with the statute and past practice,
Commerce reasonably made its affirmative circumvention finding without regard
for the reasons driving Deacero USA’s increase in HCS wire imports from Mexico
and in PC strand production during the inquiry period.
C	CONCLUSION
For the foregoing reasons, Commerce’s Final Determination was reasonable,
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supported by substantial evidence, and in accordance with law. Accordingly, the
court denies plaintiffs’ motion for judgment on the agency record and sustains
Commerce’s Final Determination. Judgment will be entered accordingly.
/s/ 	Joseph A. Laroski, Jr.
Judge
Dated: May 26, 2026
New York, New York
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