CIT Upholds ITA's Continued Use of Zeroing in AD Admin Reviews
Following recent appeals court decisions that asked the International Trade Administration to explain its continued practice of zeroing (excluding the negative dumping margins of non-dumped imports from overall dumping margin) in administrative reviews after having ended it in investigations, the Court of International Trade has accepted a partly new set of justifications from the ITA. This CIT ruling comes on the heels of the ITA's final rule that eliminated zeroing as the normal procedure in administrative reviews.
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(The ITA's February 14, 2012 final rule adopted the average-to-average comparison methodology currently used in investigations for use as the "normal" methodology in administrative reviews. This methodology provides offsets for negative dumping margins (i.e., does not apply zeroing). The ITA did not, however, prohibit zeroing in its regulations, and the preamble to the final rule makes clear that the ITA is not adopting a total prohibition regardless of comparison method or case-specific circumstance. See ITT’s Online Archives 12021329 for summary of ITA's final rule)
Korean corrosion-resistant carbon steel flat products producer/exporters from the August '08 - July '09 AD administrative review argued that the ITA must interpret the terms used in the dumping statute consistently, and apply the same methodology in reviews as in investigations. The court disagreed, noting that key terms in the dumping statute have meanings that vary according to context, pointing out that the term “dumping margin” refers alternately to average-to-average price comparisons (in investigations) or monthly average-to-transaction comparisons (in administrative reviews). Similarly, referring to the definition of dumping as “when normal value exceeds export price," the court dismissed the argument that consistency in the use of the term “exceeds” would mandate a non-zeroing methodology for reviews.
Addressing the ITA’s three arguments in defense of zeroing in reviews, the court found the first of these, that zeroing has been the preferred method and has been upheld as permissible, to be insufficient to satisfy the requirements of recent Court of Appeals’ rulings. On the agency’s second argument, that in the absence of specific statutory guidance, it is free to make limited changes to its practice in order to accede to World Trade Organization opinions, the court largely agreed, provided the agency can be shown not to have abused its discretion in so doing.
The court took particular notice of the ITA’s third argument that administrative reviews differ sufficiently in method and purpose from investigations to justify different practices in each: reviews use more precise price calculations than investigations, use month-specific average home market prices and transaction-specific U.S. sales prices, and generate specific monetary assessments, whereas investigations, the court noted, have “looser standards,” use average-to-average prices, and are intended merely to evaluate a party’s “overall selling behavior.”
The court concluded that the statute does not mandate one particular approach, that the ITA acted reasonably and did not abuse its discretion in continuing to use zeroing in reviews, and that its practices in this regard are not arbitrary.
(See ITT's Online Archives 11071237 for summary of the CAFC JTEKT ruling, which, citing to its earlier Dongbu ruling, required an explanation from the ITA of its continued use of zeroing in reviews. See ITT's Online Archives 11040408 for summary of CAFC Dongbu ruling.)
Union Steel and Dongbu Steel Co., Ltd. et. al. vs U.S. et. al. Slip Op. 12-24, dated 02/27/12, Judge Restani