MOSCOW, August 6 - RAPSI, Ingrid Burke. The US Court of International Trade (trade court) improperly impinged upon the right of the US Department of Commerce (DOC) to apply its own antidumping review procedures, the US Federal Circuit Court of Appeals (appellate court) held last week. In so holding, the appellate court established that the DOC was justified in imposing a 15.77% antidumping duty on Russian titanium and magnesium giant PSC VSMPO-Avisma Corporation (Avisma), according to the text of the appellate decision.
In the US, it is the DOC’s duty to conduct antidumping investigations, and to impose duties when necessary in order to level the playing fields between US businesses and their foreign competitors.
Background of the dispute
Following its 2006/2007 antidumping review of Avisma’s exportation activities, the DOC imposed a 15.77% antidumping duty upon all of the company’s US magnesium exports. The DOC arrived at this amount by way of a calculation that centered largely on Avisma’s magnesium production costs. Because the issue at hand was of magnesium importation, the DOC did not consider the company’s unrelated production costs, such as for titanium.
The calculation itself
In its simplest form, an antidumping duty is established by a determination of the difference between the normal value (the price at which a product is sold for consumption within a foreign competitor’s home country), and the export price (the price at which the same product is sold for import into the US). An antidumping duty is imposed in order to make up for the extent to which the former is higher than the latter.
If the DOC cannot readily determine the normal value based on market data, it will calculate a constructed value instead. A constructed value is calculated by way of a consideration of a company’s production, sales, and administrative costs; its profits; and the cost of containers.
The DOC used a constructed value instead of a normal value in calculating Avisma’s duty.
Legal proceedings
Avisma and its US subsidiary VSMPO Tirus promptly challenged the duty in trade court. Around this time, US Magnesium LLC (“US Magnesium”) intervened as the US government’s co-defendant.
Not yet having reached the merits, the trade court remanded the case to the DOC in October 2009 with instructions to consider an expert accounting report filed by Avisma.
The DOC considered Avisma’s expert report, but refused to alter its findings that had led it to establish the 15.77% antidumping duty imposition.
The trade court then held that the DOC’s original findings were out of touch with the law, and remanded the case to the DOC once again. This time, the trial court instructed the DOC to reevaluate the duty based on the cost of Avisma’s overall production process, including the production of both magnesium and titanium.
After adhering to these instructions, the DOC arrived at a new calculation and sought to replace its 15.77% duty with an 8.51% one.
US Magnesium then appealed the decision, arguing that the trade court had been mistaken in requiring the DOC to consider the expert report, and in rejecting the DOC’s findings that led to the initial antidumping duty finding. The US government accepted the trade court’s final decision and did not seek to appeal.
Avisma cross-appealed, challenging the trade court’s acceptance of the cost database that the DOC had utilized in establishing the company’s new antidumping duty after the second remand.
The appellate court held in US Magnesium’s favor on appeal, finding that the trade court had erred both in instructing the DOC to apply Avisma’s expert report and in refusing to accept the DOC’s review after the first remand.
The appellate court’s reasoning
The DOC initially refused to consider the expert report at issue because Avisma filed it after the deadline for filing factual materials.
The trade court had held that this particular report should have been exempted from the factual materials filing deadline because this was “an issue of first impression for the agency,” and the report might offer precedential value. The trade court thought it necessary to consider the report in keeping with the spirit of the antidumping law.
The appellate court found that in requiring the DOC to consider the report, the trade court was impinging upon its antidumping review bailiwick.
Quoting a 1978 case on the matter of the independence of government agencies, the judge explained, “[a]bsent constitutional constraints or extremely compelling circumstances, the administrative agencies should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties.”
The appellate court held for similar reasons that the trade court erred in rejecting the DOC’s review after first remand, explaining, “Commerce’s choice of methodology and the resulting determination of the antidumping margin are both supported by substantial evidence and are therefore reasonable.”
