NEXTEEL Co., Ltd. v. United States

Slip Op. 21-1
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Claire R. Kelly, Judge
Consol. Court No. 18-00169
OPINION AND ORDER
[Sustaining the U.S. Department of Commerce’s final results in the second remand
redetermination in the 2015–2016 administrative review of the antidumping duty
order on welded line pipe from the Republic of Korea.]
Dated: January 4, 2021
Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S.
Hodgins, Edward John Thomas , III, Jordan L. Fleischer, Sabahat Chaudhary, and
Eugene Degnan, Morris, Manning & Martin LLP, of Washington, DC, for plaintiff
Husteel Co., Ltd.
J. David Park, Henry D. Almond, Daniel R. Wilson, and Kang W. Lee, Arnold &
Porter Kaye Scholer LLP, of Washington, DC, for consolidated plaintiffs Hyundai
Steel Company and NEXTEEL Co., Ltd.
HUSTEEL CO., LTD. ET AL.,
Plaintiff and Consolidated
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
CALIFORNIA STEEL INDUSTRIES ET
AL.,
Defendant-Intervenors and
Consolidated Defendant-
Intervenors.
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Jeffrey M. Winton and Amrietha Nellan, Law Office of Winton & Chapman PLLC, of
Washington, DC, for consolidated plaintiff SeAH Steel Corporation.
Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for defendant. Also on the brief were
Jeffrey Bossert Clark, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, and L. Misha Preheim, Assistant Director. Of Counsel was Reza Karamloo,
Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance,
U.S. Department of Commerce, of Washington, DC.
Elizabeth 	J. 	Drake, 	Roger 	B. 	Schagrin, 	Christopher 	Todd 	Cloutier, 	and 	John
Winthrop Bohn, Schagrin Associates, of Washington, DC, for defendant-intervenors
California Steel Industries and Welspun Tubular LLC USA.
Gregory J. Spak, Frank J. Schweitzer, Kristina Zissis, Luca Bertazzo, and Matthew
Wolf Solomon, White & Case LLP, of Washington, DC, for defendant-intervenors
Maverick Tube Corporation and IPSCO Tubulars Inc.
Kelly, 	Judge: 	Before 	the 	court 	is 	the 	U.S. 	Department 	of 	Commerce’s
(“Commerce”) second remand determination in the 2015–2016 administrative review
of the antidumping duty (“ADD”) order on welded line pipe (“WLP”) from the Republic
of Korea (“Korea”), filed pursuant to the court’s remand order in Husteel 	Co. v.
United States, 44 CIT __, __, 463 F. Supp. 3d 1334, 1344 (2020) (“Husteel II”). 	See
Final Results of Redetermination Pursuant to Second Ct. Remand [in Husteel II],
Sept. 16, 2020, ECF No. 141 (“Second Remand Results”); see also [WLP] from [Korea],
83 Fed. Reg. 33,919 (Dep’t Commerce July 18, 2018) (final results of [ADD] admin.
review; 2015–2016) (“Final Results”) as amended by [WLP] from [Korea], 83 Fed. Reg.
39,682 (Dep’t Commerce Aug. 10, 2018) (amended final results of [ADD] admin.
review; 	2015–2016) 	(“Amended 	Final 	Results”) 	and 	accompanying 	Issues 	and
Decisions Memo. for the Final Results of the 2015–2016 Admin. Review of the [ADD]
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Order on Welded Line Pipe from Korea, A-580-876, (July 11, 2018), ECF No. 25-5
(“Final Decision Memo”). 	For the following reasons, the court sustains Commerce’s
second remand redetermination.
BACKGROUND
The court presumes familiarity with the facts of this case as set out in its
previous opinions ordering remand to Commerce, and now recounts those facts
relevant to the court’s review of the Second Remand Results. See Husteel II, 44 CIT
at __, 463 F. Supp. 3d at 1337–39; see also Husteel Co. v. United States, 44 CIT __,
__, __, 426 F. Supp. 3d 1376, 1380–82 (2020) (“Husteel I”). 	On August 10, 2018,
Commerce 	published 	its 	amended 	final 	determination 	in 	its 	2015–2016
administrative review of the ADD order covering WLP from Korea. 	See generally
Amended Final Results. 	Commerce calculated weighted average dumping margins
of 18.77 percent for Hyundai Steel Company/Hyundai HYSCO (“Hyundai”), and 14.39
percent for SeAH Steel Corporation (“SeAH”). 	See id., 83 Fed. Reg. at 39,682.
Pursuant to U.S. Court of International Trade Rule 56.2, SeAH, Hyundai, NEXTEEL
Co., Ltd. (“NEXTEEL”), and Husteel Co., Ltd. (“Husteel”) brought this consolidated
action on several motions for judgment on the agency record, challenging various
aspects of Commerce’s final determination. See Pl. [SeAH]’s Mot. J. Agency R., Feb.
1, 2019, ECF No. 37; Consol. Pl. [Hyundai]’s 56.2 Mot. J. Agency R., Feb. 1, 2019,
ECF No. 39; Consol. Pl. [NEXTEEL]’s 56.2 Mot. J. Agency R., Feb. 1, 2019, ECF No.
41; Pl. [Husteel]’s Mot. J. Agency R., Feb. 1, 2019, ECF No. 42.
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In Husteel I, the court remanded Commerce’s final determination for further
explanation or reconsideration. See 44 CIT at __, 426 F. Supp. 3d at 1395. The court
held that Commerce’s upward adjustment to the reported costs of hot rolled coil
(“HRC”)—an input used to produce WLP—to account for a particular market
situation (“PMS”) in Korea when subjecting Hyundai’s home market sales of WLP to
the below-cost sales test was unsupported by substantial evidence and contrary to
law. 	See id., 44 CIT at __, 426 F. Supp. 3d at 1383–92, 1394–95. 	The court also
remanded Commerce’s finding that SeAH’s third country sales into Canada were
unrepresentative, and its resultant decision to use constructed value to determine
the normal value of SeAH’s sales, for further explanation or reconsideration. 	See id.,
44 CIT at __, 426 F. Supp. 3d at 1392–95.
In Husteel II, the court sustained Commerce’s decision, under respectful
protest, 1 to reverse its PMS finding and to calculate SeAH and Hyundai’s dumping
margin without applying an upward adjustment to the reported costs of HRC. 	See
Husteel II, 44 CIT at __, 463 F. Supp. 3d at 1339–41; see also Final Results of
Redetermination Pursuant to Ct. Remand [in Husteel I] at 1–2, Apr. 1, 2020, ECF
No. 124. 	The court also sustained Commerce’s decision to calculate SeAH’s normal
value using its third country sales into Canada. See Husteel II, 44 CIT at __, 463 F.
Supp. 3d at 1341–42. 	However, as requested by Commerce, the court remanded
1 By adopting a position “under protest,” Commerce preserves its right to appeal. See
Viraj Grp., Ltd. v. United States, 343 F. 3d 1371, 1376 (Fed. Cir. 2003).
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Commerce’s 	refusal 	to 	grant 	to 	SeAH 	a 	constructed 	export 	price 	offset 	when
calculating SeAH’s normal value. See id., 44 CIT at __, 463 F. Supp. 3d at 1343–44.
For its second remand, upon reconsideration of the record evidence and the
court’s remand order, Commerce determined that a constructed export price offset for
SeAH is warranted. 	Second Remand Results at 2–6. 	SeAH did not object to
Commerce’s redetermination, and no other party commented on the draft results. Id.
at 5. Commerce indicated its intent to issue a Timken notice with the amended final
results should the court sustain its second remand redetermination. 2 	Id. at 6. 	On
November 2, 2020, Defendant filed comments on the Second Remand Results with
the 	court, 	notifying 	that 	no 	party 	filed 	comments 	challenging 	Commerce’s
redetermination, and requesting that the court sustain Commerce’s Second Remand
Results and enter judgment for the United States. 	See Def.’s Cmts. Regarding
Commerce’s [Second Remand Results], Nov. 2, 2020, ECF No. 143.
2 	The Timken Notice stems from Timken Co. v. United States, 893 F.2d 337 (Fed.
Cir. 1990) (“Timken Co.”), as clarified by Diamond Sawblades Mfrs. Coalition v.
United States, 626 F.3d 1374 (Fed. Cir. 2010), where the Court of Appeals for the
Federal Circuit clarified the requirements of 19 U.S.C. § 1516a(c)(1). Commerce must
notify the public when a court’s final judgment in a case is “not in harmony” with an
original agency determination, and Commerce will suspend liquidations to ensure
that post-notice entries are liquidated at a rate consistent with a conclusive court
decision. Timken Co., 893 F.2d at 341.
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JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to section 516a(a)(2)(B)(iii) of the Tariff
Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012), 3 and 28 U.S.C.
§ 1581(c) (2012), which grant the court authority to review actions contesting the final
determination in an administrative review of an [ADD] order. The court will uphold
Commerce’s 	remand 	redetermination 	unless 	it 	is 	“unsupported 	by 	substantial
evidence on the record, or otherwise not in accordance with law.” 	19 U.S.C.
§ 1516a(b)(1)(B)(i). “The results of a redetermination pursuant to court remand are
also reviewed ‘for compliance with the court’s remand order.’” 	Xinjiamei Furniture
(Zhangzhou) Co. v. United States, 38 CIT __, __, 968 F. Supp. 2d 1255, 1259 (2014)
(quoting Nakornthai Strip Mill Public Co. v. United States, 32 CIT 1272, 1274, 587
F. Supp. 2d 1303, 1306 (2008)).
DISCUSSION
Commerce, to the extent practicable, calculates normal value based on prices
for sales in the comparison market that are made at the same level of trade (“LOT”)
as the export price (or constructed export price). 19 U.S.C. § 1677b(a)(1)(B)(i). “Sales
are made at different levels of trade if they are made at different marketing stages
(or their equivalent).” 	19 C.F.R. § 351.412(c)(2) (2017). 4 	When identifying the LOT
3 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.
4 Further citations to Title 19 of the Code of Federal Regulations are to the 2017
edition.
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for comparison market sales (here, third country sales) and export price sales, see 19
U.S.C. § 1677a(a), Commerce looks at what selling activities relate to the starting
price before any statutory adjustments to the starting price are made. See 19 C.F.R.
§ 351.412(c)(i), (iii). However, when identifying the LOT for constructed export price
sales, see 19 U.S.C. § 1677a(b), Commerce looks “only [at] the selling activities
reflected in the price after the deduction of expenses and profit under [19 U.S.C.
§ 1677a(d)(2)].” See [WLP] from [Korea], 83 Fed. Reg. 1,023 (Dep’t Commerce Jan. 9,
2018) (prelim. results of [ADD] admin. review; 2015–2016) (“Prelim. Results”) and
accompanying Decisions Memo. for the [Prelim. Results] at 17, A-580-876, PD 259,
bar code 3657712-01 (Jan. 2, 2018) (“Prelim. Decision Memo”) (citing Micron Tech.,
Inc. v. United States, 243 F.3d 1301, 1314–16 (Fed. Cir. 2001) (“Micron”)); see also 19
C.F.R. § 351.412(c)(ii).
Under 19 U.S.C. § 1677b(a)(7)(A), if it is unable to match foreign market sales
with export price (or constructed export price) sales at the same LOT, Commerce will
make a LOT adjustment. See Prelim. Decision Memo at 17. Where Commerce uses
constructed export price sales, if the normal value of those sales is established at a
LOT which constitutes a more advanced stage of distribution than the constructed
export price, and if it lacks the necessary data to determine a LOT adjustment,
Commerce will grant a constructed export price offset. See 19 U.S.C. § 1677b(a)(7)(B);
Prelim. Decision Memo at 17. 	When granting a constructed export price offset,
Commerce shall reduce the normal value “by the amount of indirect selling expenses
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incurred in the country in which normal value is determined on sales of the foreign
like product but not more than the amount of such expenses for which a deduction is
made under [19 U.S.C. § 1677a(d)(1)(D)].” 19 U.S.C. § 1677b(a)(7)(B).
Commerce explains that it failed to include in its discussion of the LOT for the
third country sales (here, Canada) the selling functions performed by SeAH’s U.S.
affiliates, Pusan Pipe America (“PPA”) and State Pipe and Supply, Inc. (“State Pipe”),
in addition to those performed by SeAH. 	Second Remand Results at 3; see also
Prelim. Decision Memo at 19–20. 	Commerce thus revises its analysis as follows.
Second Remand Results at 3–5.
Commerce determines the LOT for Canadian sales and U.S. sales in order to
assess whether a LOT adjustment or constructed export price offset is warranted. In
the Canadian market, Commerce determines the LOT by identifying the channels of
distribution for SeAH’s sales, and then ascertaining what selling functions and
activities relate to the starting price, i.e., the price charged by SeAH and its affiliates
to the unaffiliated customer. See Second Remand Results at 3–4. Commerce observes
that SeAH made sales through two channels of distribution: (1) “back-to-back sales
through PPA to unaffiliated Canadian customers”; and (2) “sales to unaffiliated
Canadian 	customers 	from 	State 	Pipe’s 	Canadian 	warehouse 	of 	merchandise
purchased from PPA.” 	Id. at 3. 	With the exception of warehouse operations,
Commerce finds that SeAH performed the same selling functions and activities in
both channels, see id. at 3–4, and sorts SeAH’s selling functions and activities in both
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channels into four categories: sales and marketing; freight and delivery; inventory
maintenance and warehousing; and warranty and technical support. 	Id. 	With
respect to each category, Commerce finds that SeAH performed functions at the same
level 	of 	intensity, 	and 	thus 	determines 	all 	of 	SeAH’s 	Canadian 	market 	sales
constitute one LOT. Id. at 4.
In the U.S. market, Commerce finds that SeAH made sales through three
channels of distribution: (1) “back-to-back sales through its U.S. affiliate PPA to
unaffiliated U.S. customers”; (2) “sales to unaffiliated U.S. customers from State
Pipe’s U.S. warehouse of merchandise purchased from PPA”; and (3) “sales of further
manufactured merchandise from PPA’s inventory.” Id. Commerce examines SeAH’s
selling 	activities 	in 	each 	channel; 	however, 	in 	accordance 	with 	19 	C.F.R.
§ 351.412(c)(ii), Commerce excludes from its consideration those selling activities
listed in 19 U.S.C. § 1677a(d), 5 i.e., those performed by PPA and State Pipe in the
5 19 U.S.C. § 1677a(d). Additional adjustments to constructed export price. For
purposes of this section, the price used to establish constructed export price shall also
be reduced by—
(1) the amount of any of the following expenses generally incurred by or
for the account of the producer or exporter, or the affiliated seller in the
United 	States, 	in 	selling 	the 	subject 	merchandise 	(or 	subject
merchandise to which value has been added)—
(A) commissions for selling the subject merchandise in the United
States;
(B) expenses that result from, and bear a direct relationship to,
the sale, such as credit expenses, guarantees and warranties;
(C) any selling expenses that the seller pays on behalf of the
purchaser; and
(footnote continued)
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United States. Compare Second Remand Results at 4–5 with Prelim. Decision Memo
at 19–20; see also Micron, 243 F.3d at 1314–16. 	Commerce finds SeAH performed
“sales and marketing, freight and delivery services, and inventory maintenance and
warehousing for each of its three reported U.S. channels” at the same level of
intensity, and, as a result, determines that all of SeAH’s constructed export sales
constitute one LOT. Second Remand Results at 4–5.
After excluding the selling activities of State Pipe and PPA in the U.S. market,
when comparing the LOT of SeAH’s constructed export price sales to the LOT of its
Canadian sales, Commerce finds there are “significant differences between the selling
functions performed for U.S. and Canadian customers.” 	See id. at 5. 	Namely,
Commerce finds that SeAH performed many selling functions in the Canadian
market that it did not perform in the U.S. market. 	Id. 	As a result, Commerce
determines that the LOT of SeAH’s Canadian sales is at a more advanced stage of
distribution than the LOT of SeAH’s constructed export price sales. Id. Noting that
“no LOT adjustment is possible,” Commerce grants a constructed export price offset
(D) any selling expenses not deducted under subparagraph (A),
(B), or (C);
(2) 	the 	cost 	of 	any 	further 	manufacture 	or 	assembly 	(including
additional material and labor), except in circumstances described in
subsection (e); and
(3) the profit allocated to the expenses described in paragraphs (1) and
(2).
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pursuant to 19 U.S.C. § 1677b(a)(7)(B) and 19 C.F.R. § 351.412(f). 6 	Id. 	Commerce
calculates an estimated weighted-average dumping margin of 4.23 percent for SeAH
and 9.24 percent for Hyundai, and calculates a review-specific rate applicable to non-
selected respondents of 6.74 percent. Id. at 6.
Commerce’s redetermination in its Second Remand Results is supported by
substantial evidence and in accordance with law. Commerce reasonably accounts for
the selling activities of State Pipe and PPA in calculating SeAH’s dumping margin,
and none of the parties contest Commerce’s determination. 	As such, Commerce’s
decision to grant SeAH a constructed export price offset is sustained.
CONCLUSION
For the foregoing reasons, Commerce’s second remand redetermination is
supported by substantial evidence and in accordance with law and is therefore
sustained. Judgment will enter accordingly.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: 	January 4, 2021
New York, New York
6 19 C.F.R. § 351.412(f)(2). Amount of the offset. The amount of the constructed export
price offset will be the amount of indirect selling expenses included in normal value,
up to the amount of indirect selling expenses deducted in determining constructed
export price. In making the constructed export price offset, “indirect selling expenses”
means selling expenses, other than direct selling expenses or assumed selling
expenses (see § 351.410), that the seller would incur regardless of whether particular
sales were made, but that reasonably may be attributed, in whole or in part, to such
sales.
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