Mittal Steel USA, Inc. v. United States

Slip Op. 07-117

UNITED STATES COURT OF INTERNATIONAL TRADE

:
MITTAL STEEL USA, INC. :
(formerly INTERNATIONAL :
STEEL GROUP, INC.), :
:
Plaintiff, :
:
v. :
:
UNITED STATES, : Before: Richard K. Eaton, Judge
:
Defendant, : Consol. Court No. 05-00308
: Public Version
and :
:
UNION STEEL MANUFACTURING :
CO., LTD.; DONGBU STEEL CO., :
LTD.; POSCO; and HYUNDAI :
HYSCO CO., LTD., :
:
Deft.-Ints. :
:

OPINION

[United States Department of Commerce’s final results of the
tenth administrative review of the antidumping duty order
applicable to corrosion-resistant carbon steel flat products from
Korea sustained.]

Dated: August 1, 2007

Stewart and Stewart (Wesley K. Caine, Caryn B. Schenewerk and
Sarah V. Stewart), for plaintiff.

Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Patricia M. McCarthy, Deputy
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Stephen C. Tosini); Office of the
Chief Counsel for Import Administration, United States Department
of Commerce (Ada Loo and Irene H. Chen), of counsel, for
defendant.

Troutman Sanders LLP (Donald B. Cameron and Brady W. Mills), for
defendant-intervenors Union Steel Manufacturing Co., Ltd. and
Consol. Court No. 05-00308 Page 2

Dongbu Steel Co., Ltd.

Akin, Gump, Strauss, Hauer & Feld, LLP (Spencer S. Griffith,
Warren E. Connelly, Jaehong D. Park, Jarrod M. Goldfeder, Jason
A. Park and Lisa W. Ross), for defendant-intervenors POSCO and
Hyundai HYSCO Co., Ltd.

Eaton, Judge: This consolidated action1 is before the court

on plaintiff Mittal Steel USA, Inc.’s (“Mittal”) motion for

judgment upon the agency record pursuant to USCIT Rule 56.2. By

its motion, plaintiff contests certain aspects of the United

States Department of Commerce’s (“Commerce” or the “Department”)

final results of the tenth administrative review of the

antidumping duty order applicable to imports into the United

States of corrosion-resistant carbon steel flat products (“CORE”)

from Korea made during the period of review (“POR”) August 1,

2002, to July 31, 2003. See Certain CORE from the Republic of

Korea, 70 Fed. Reg. 12,443 (Dep’t of Commerce Mar. 14, 2005)

(tenth admin. rev.) (“Final Results”). In addition, plaintiff

contests portions of the Department’s conclusions with respect to

Hyundai HYSCO Co., Ltd.’s (“HYSCO”) new shipper review, which was

part of the same determination. See 19 U.S.C. § 1675(a)(2)(B)

(2000). Jurisdiction is had pursuant to 28 U.S.C. § 1581(c)

1
This action includes court numbers 05-00308 and 05-
00309. See Mittal Steel USA ISG, Inc. v. United States, Consol.
Ct. No. 05-00308 (Oct. 5, 2005) (order granting plaintiff’s
consent motion to consolidate cases). Court number 05-00309
involved plaintiff’s challenge to the final results of the new
shipper review.
Consol. Court No. 05-00308 Page 3

(2000), and 19 U.S.C. § 1516a(a)(2)(B)(iii). For the reasons set

forth below, Commerce’s Final Results are sustained.

BACKGROUND

Plaintiff is a domestic producer of CORE products. On

August 19, 1993, Commerce published the antidumping duty order

applicable to imports into the United States of CORE from Korea.

See Certain CORE From Korea, 58 Fed. Reg. 44,159 (Dep’t of

Commerce Aug. 19, 1993) (“CORE Order”). After having conducted

nine prior administrative reviews of the CORE Order, Commerce, on

August 1, 2003, published notice that it would consider requests

for what would be the tenth review. See Certain CORE from Korea,

68 Fed. Reg. 45,218 (Dep’t of Commerce Aug. 1, 2003) (notice).

Thereafter, on August 29, 2003, plaintiff asked Commerce to

conduct an administrative review with respect to the behavior and

market activities of certain Korean respondents including: POSCO;

Dongbu Steel Co., Ltd. (“Dongbu”); and Union Steel Manufacturing

Co., Ltd. (“Union”). The tenth administrative review was

initiated on September 30, 2003. See Initiation of Antidumping

and Countervailing Duty Reviews, 68 Fed. Reg. 56,262, 56,263–64

(Dep’t of Commerce Sept. 30, 2003) (notice). In addition, during

the proceeding, HYSCO sought a new shipper review of its sales of

CORE to the United States pursuant to 19 U.S.C. § 1675(a)(2)(B),

which Commerce initiated on October 3, 2003. See Certain CORE
Consol. Court No. 05-00308 Page 4

from Korea, 68 Fed. Reg. 57,423 (Dep’t of Commerce Oct. 3, 2003)

(notice).

On March 14, 2005, Commerce published the Final Results of

both the tenth administrative review and HYSCO’s new shipper

review. See Final Results, 70 Fed. Reg. at 12,443. Based on its

analysis, Commerce assigned subject imports from POSCO a 2.34

percent dumping margin; Union and Dongbu received de minimis

margins;2 and HYSCO, as a result of the new shipper review,

received a margin of zero. See id. at 12,445.

STANDARD OF REVIEW

When reviewing a final antidumping determination the court

“shall hold unlawful any determination, finding, or conclusion

found . . . to be unsupported by substantial evidence on the

record, or otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i). “Substantial evidence is ‘such relevant

evidence as a reasonable mind might accept as adequate to support

a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United

States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol.

2
Under the statute, Commerce is required to “disregard
any weighted average dumping margin that is de minimis as defined
in section 1673b(b)(3) of this title.” 19 U.S.C. § 1673d(a)(4).
“[A] weighted average dumping margin is de minimis if the
administering authority determines that it is less than 2 percent
ad valorem or the equivalent specific rate for the subject
merchandise.” 19 U.S.C. § 1673b(b)(3). Thus, Union and Dongbu
were not required to pay antidumping duties on their entries.
Consol. Court No. 05-00308 Page 5

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). The existence of

substantial evidence is determined “by considering the record as

a whole, including evidence that supports as well as evidence

that ‘fairly detracts from the substantiality of the evidence.’”

Id. (quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556,

1562 (Fed. Cir. 1984)).

In addition, “[a]s long as the agency’s methodology and

procedures are reasonable means of effectuating the statutory

purpose, and there is substantial evidence in the record

supporting the agency’s conclusions, the court will not impose

its own views as to the sufficiency of the agency’s investigation

or question the agency’s methodology.” Ceramica Regiomontana,

S.A. v. United States, 10 CIT 399, 404–05, 636 F. Supp. 961, 966

(1986), aff’d, 810 F.2d 1137, 1139 (Fed. Cir. 1987).

DISCUSSION

I. Model Match Methodology

Plaintiff’s first claim is that the Department unreasonably

denied its request that respondents be asked to provide more

detailed product data for use in Commerce’s model match

criteria.3 The agency employs these criteria to ensure that the

3
The criteria include: type; reduction process; metallic
coating process; clad material/coating metal; quality; yield
strength; metallic coating weight; minimum thickness; width;
form; temper rolling; and leveling. Letter from Stewart and
(continued...)
Consol. Court No. 05-00308 Page 6

merchandise sold in the U.S. market is being compared “with a

suitable home-market product” for purposes of calculating

antidumping duties. Koyo Seiko Co. v. United States, 66 F.3d

1204, 1209 (Fed. Cir. 1995); see also 19 U.S.C.

§ 1677(16)(C)(iii).

Commerce maintains that, in accordance with its practice, it

chose the model match criteria during the initial sales at less

than fair value investigation and has used them in each review

since in order to provide a “consistent methodology from review

to review” upon which respondents could rely. Def.’s Resp. Pl.’s

Mot. J. Agency R. (“Def.’s Resp.”) 9; see also Certain CORE From

Korea, 58 Fed. Reg. 37,176 (Dep’t of Commerce July 9, 1993).

It is plaintiff’s position that, had respondents been asked

for more specific product data, it would have been able to

conduct a more detailed analysis and possibly uncover a

compelling reason for changing the criteria, thus enabling

Commerce to produce more accurate results. See Pl.’s Mem. Supp.

Mot. J. Agency R. (“Pl.’s Mem.”) 12 (“Commerce refused even to

request that respondents submit the more precise data. This

precluded Mittal from analyzing detailed sales information that

might have substantiated Mittal’s fair concerns . . . .”)

3
(...continued)
Stewart, Wesley K. Caine, to Commerce (May 28, 2004) Ex. A, at A-
2.
Consol. Court No. 05-00308 Page 7

(emphasis omitted).4

For Commerce, the need for consistency in the model match

criteria stems from its duty to calculate antidumping rates as

accurately as possible. See, e.g., Lasko Metal Prods., Inc. v.

United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994). Because

consistency is, according to Commerce, linked inextricably to

accuracy, the Department maintains that it changes its model

match criteria only if a participant can demonstrate a

4
For instance, plaintiff states:

Commerce defined “widths” by reference to the
following four measurement groups: (a) >= ½"
but <24"; (b) >=24" but <40"; (c) >=40" but
<60"; and (d) >=60". Similarly, it defined
“thickness” by reference to these 11 separate
groups: (a) <0.014"; (b) >=0.014" but
<0.015"; (c) >=0.015" but <0.016; (d)
>=0.016" but <0.018"; (e) >=0.018" but
<0.022"; (f) >=0.022" but <0.028"; (g)
>=0.028" but <0.044"; (h) >=0.044" but
<0.060"; (i) >=0.060" but <0.085"; (j)
>=0.085" but <0.130"; and (k) >=0.130".
Thus, to identify goods for price
comparisons, Commerce would treat as
“identical” articles all CORE within a given
range, so far as the particular criterion was
concerned. Put differently, articles with
different physical dimensions could still be
treated as “identical,” and Commerce could
directly compare their prices in antidumping
margin calculations.

Pl.’s Mem. 6. In Mittal’s view, requiring respondents to
provide product data on a narrower range of dimensions might have
provided a compelling reason to change the criteria. That is,
more specific data could, according to plaintiff, have
demonstrated a substantial difference between the subject
merchandise and the purportedly comparable foreign like product.
Consol. Court No. 05-00308 Page 8

“compelling reason” for the modification. Def.’s Resp. 9; see

also Mem. from Eric B. Greynolds, Program Manager, Office of

AD/CVD Enforcement VI, to Melissa G. Skinner, Dir., Office of

AD/CVD Enforcement VI (Aug. 27, 2004) (“Model Match Mem.”) at 5

(citing Steel Wire Rope From Malaysia, 66 Fed. Reg. 12,759 (Dep’t

of Commerce Feb. 28, 2001); Antifriction Bearings (Other than

Tapered Roller Bearings) and Parts Thereof From France; et al.,

57 Fed. Reg. 28,360, 28,366 (Dep’t of Commerce June 24, 1992);

Tapered Roller Bearings, Finished and Unfinished, and Parts

Thereof, From Japan, 56 Fed. Reg. 41,508, 41,509 (Dep’t of

Commerce Aug. 21, 1991)).

Plaintiff first introduced its concerns in a letter from its

counsel to Commerce. See Letter from Stewart and Stewart, Wesley

K. Caine, to Commerce (May 28, 2004) (“May 28 Letter”). By this

letter, plaintiff sought to demonstrate the necessity of

demanding more specific data by claiming that the product ranges

in Commerce’s questionnaire, for thickness, width, type and

quality did not correspond with the actual data contained in

Union’s, Dongbu’s and POSCO’s pricing sheets. See May 28 Letter

at 2. To bolster its position that Commerce should have asked

respondents for additional product and pricing information,

plaintiff compared merchandise within Commerce’s ranges to the
Consol. Court No. 05-00308 Page 9

prices charged.5 Mittal concluded that Commerce’s ranges

produced a variance in prices sufficient to warrant the agency’s

issuance of a supplemental questionnaire. See Pl.’s Mem. 27

(“This should have prompted the agency to at least request more

precise data, which would have allowed it and Mittal to pursue

the matching issues more deeply via computer analysis. However,

the agency refused to request the information, much less perform

analyses, which left valid issues un-addressed.”) (emphasis

omitted); see also Pl.’s Mem. 27 (citing Freeport Minerals Co. v.

United States, 776 F.2d 1029, 1033 (Fed. Cir. 1985)). Before the

court, plaintiff continues to press this claim insisting,

5
Specifically, plaintiff [[

]] Pl.’s
Mem. 8. For instance, with respect to thickness, plaintiff
contends that it examined

[[

]]

Pl.’s Mem. 8 (emphasis omitted). Plaintiff contends that it
found similar results after analyzing [[
]]. See Pl.’s Mem. 8–10.
Consol. Court No. 05-00308 Page 10

however, that it is not “asking the Court at this point to rule

categorically that Commerce’s methodology completely fails as a

matter of law.” Pl.’s Mem. 27 n.13.

According to Commerce, it found the issuance of a

supplemental questionnaire was not required because plaintiff’s

May 28 Letter, and the various price analyses contained therein,

failed to establish its necessity. As Commerce stated in its

Model Match Memorandum:

Regarding the price lists cited by
[plaintiff] in [its] submission, we find
there is no evidence indicating that the
price lists reflect actual transaction
prices, and, thus, we find that they do not
necessarily reflect the Korean respondents’
actual sales and pricing practices. In
addition, several of the price lists cited by
[plaintiff] are exclusive to the Korean
respondents’ home market and, thus, offer no
information on how the products are sold in
the U.S. market. Therefore, we find that the
internal pricing guidelines cited by
[plaintiff]: (1) fail to indicate a change in
the Korean respondents’ production/pricing
practices and (2) do not necessarily reflect
the norms of the Korean respondents.

Model Match Mem. at 5–6.

Commerce further argues that plaintiff “overstates the case

that narrower bands for model matches will necessarily create

more accurate results.” Def.’s Resp. 14. The Department insists

that “the more bands that are applied, the fewer actual sale to

sale matches there will be -- requiring Commerce to resort to

constructed value for additional United States sales.” Def.’s
Consol. Court No. 05-00308 Page 11

Resp. 14.

As has been noted, plaintiff does not demand a change in the

Department’s methodology. Mittal’s sole claim is that Commerce

should have sought more information from the respondents. The

stated purpose of plaintiff’s request is to uncover additional

information that it hopes will provide a basis for a challenge to

Commerce’s model match criteria. Therefore, the court is asked

to determine whether Commerce supported with substantial evidence

its decision not to issue a supplemental questionnaire seeking

additional model match data. The court finds that Commerce has

justified its decision.

First, as noted by Commerce, the price lists plaintiff

references are just what they appear to be — price lists. This

being the case, Commerce was justified in finding that they did

not necessarily reflect actual sales. Commerce, on the other

hand, had obtained actual sales data from the questionnaire

responses upon which it reasonably relied. Also, Commerce

observed that some of plaintiff’s evidence of respondents’

pricing practices related solely to home market sales, which shed

no light on the price of CORE sold by respondents in the United

States. Moreover, Commerce was not unreasonable in finding that

plaintiff’s demand to narrow the range of dimensions compared

would create more inaccuracies in dumping calculations because

fewer actual sales would be available for direct comparison.
Consol. Court No. 05-00308 Page 12

Thus, because plaintiff has not made out a sufficient case

for the issuance of a supplemental questionnaire and because the

Department had in its possession all of the information needed to

make a fair and reasonable product comparison, the court sustains

Commerce’s decision not to seek additional product and sales

data.

II. Constructed Export Price: Deduction of Selling Expenses

A. Location of Incurred Costs

Plaintiff next insists that Commerce unlawfully failed to

deduct from constructed export price (“CEP”)6 certain “core

6
Constructed export price (“CEP”) is

the price at which the subject merchandise is
first sold (or agreed to be sold) in the
United States before or after the date of
importation by or for the account of the
producer or exporter of such merchandise or
by a seller affiliated with the producer or
exporter, to a purchaser not affiliated with
the producer or exporter, as adjusted under
subsections (c) and (d) of this section.

19 U.S.C. § 1677a(b). CEP, or U.S. price, is then compared to
normal value to calculate the dumping margin. Normal value is
defined as

the price at which the foreign like product
is first sold (or, in the absence of a sale,
offered for sale) for consumption in the
exporting country, in the usual commercial
quantities and in the ordinary course of
trade and, to the extent practicable, at the
same level of trade as the export or
constructed export price . . . .
(continued...)
Consol. Court No. 05-00308 Page 13

selling expenses7 associated with resale transactions of subject

merchandise in the United States . . . merely because [the

expenses] involved activities that occurred ‘outside’ the United

States.” Pl.’s Mem. 33. More specifically, plaintiff asserts

that Commerce committed legal error by its unwillingness to make

a downward adjustment to CEP equal to the claimed selling

expenses incurred by the Korean parents in facilitating the

resales of CORE to unaffiliated U.S. customers.8 See Pl.’s Mem.

12–13. For plaintiff, under 19 U.S.C. § 1677a(d),9 if “the

6
(...continued)
19 U.S.C. § 1677b(a)(1)(B)(i).
7
Plaintiff’s reference to “core” selling functions is
apparently intended to describe such activities as negotiating
price, entering into sales contracts and approving resales;
however, neither the statute nor the regulations define the
phrase. See Pl.’s Mem. 39 (suggesting that Commerce define
“core” functions, if necessary).
8
The Korean parent companies are respondents: Union,
Dongbu, POSCO and HYSCO.
9
Subsection 1677a(d) provides, in pertinent part:

[T]he price used to establish [CEP] 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
(continued...)
Consol. Court No. 05-00308 Page 14

activities and associated expenses relate to the resales in the

United States,” the deduction must be made regardless of when and

where the expenses were incurred. Pl.’s Mem. 12.

With respect to plaintiff’s legal contention, Commerce does

not disagree. That is, the Department maintains that it makes

justified CEP deductions no matter where expenses are incurred or

paid. See Def.’s Resp. 16 (noting that Commerce deducts from CEP

selling expenses that “relate directly to the sale to an

unaffiliated purchaser, even if, for example, the foreign parent

of the affiliated U.S. importer pays those expenses”) (internal

quotation marks & citation omitted). Rather, Commerce urges that

its decision here not to deduct certain costs from CEP was

9
(...continued)
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

(D) any selling expenses
not deducted under
subparagraph (A), (B), or
(C) . . . .

19 U.S.C. § 1677a(d)(1).
Consol. Court No. 05-00308 Page 15

appropriate because the amounts expended by respondents related

to sales to affiliated U.S. importers and not to unaffiliated

U.S. customers. See Def.’s Resp. 14; see also 19 C.F.R.

§ 351.402(b) (2005);10 Issues & Decisions for the Final Results

of the Antidumping Duty New Shipper Review and the Antidumping

Duty Administrative Review of Certain CORE from Korea (Dep’t of

Commerce Mar. 7, 2005) (“Issues & Decs. Mem.”) at 10.

Moreover, at no point does Commerce state that it did not

deduct the expenses because they were incurred in Korea. Rather,

it is apparent that Commerce’s justification for its decision to

not deduct from respondents’ CEP certain expenses is its

conclusion that selling expenses can only be deducted from CEP

when they are incurred in connection with the sale of merchandise

to an unaffiliated U.S. customer. Thus, plaintiff’s legal

argument that Commerce acted unlawfully by refusing to deduct

10
The regulation provides:

In establishing [CEP] under section 772(d) of
the Act, the Secretary will make adjustments
for expenses associated with commercial
activities in the United States that relate
to the sale to an unaffiliated purchaser, no
matter where or when paid. The Secretary
will not make an adjustment for any expense
that is related solely to the sale to an
affiliated importer in the United States,
although the Secretary may make an adjustment
to normal value for such expenses under
section 773(a)(6)(C)(iii) of the Act.

19 C.F.R. § 351.402(b).
Consol. Court No. 05-00308 Page 16

from CEP selling expenses incurred by respondents simply because

those expenses were from activities taking place outside the

United States is without merit.

B. Costs Related to Resales of CORE to Unaffiliated U.S.
Purchasers

Plaintiff also raises the factual argument that respondents

did, in fact, incur core selling expenses “associated with

commercial activities in the United States that relate to the

sale to an unaffiliated purchaser . . . .” 19 C.F.R.

§ 351.402(b). Commerce’s failure to deduct those expenses from

CEP was, in Mittal’s view, unsupported by substantial evidence.

To buttress its point, plaintiff sets forth what it believes

were the selling functions performed by each respondent in the

resale of its merchandise in the United States. For instance,

with respect to Union’s relationship with its affiliate DKA,

plaintiff states:

Union sold CORE to DKA, its U.S. affiliate,
who in turn resold the merchandise to
unrelated U.S. buyers in reportable CEP
transactions. The record shows that Union,
the parent, performed many selling functions
in the affiliate’s U.S. re-sales. In fact,
describing the affiliate’s limited role,
Union reported that DKA was the importer of
record for all of Union’s U.S. sales and
acted as a communications liaison between
U.S. customers and Union and as a processor
of sales-related documentation. Thus, while
DKA receives inquiries from customers and may
propose a price for the purchase, it does not
have the authority to accept or reject the
order. In fact, DKA does not even take
possession of the imported goods; rather,
Consol. Court No. 05-00308 Page 17

Union ships the goods directly to DKA’s U.S.
customer.

Pl.’s Mem. 13 (internal quotation marks & citations omitted)

(emphasis in original). In addition, plaintiff states that Union

engaged in other activities aimed at selling CORE to unrelated

U.S. customers including handling claims for defective CORE sold

in the U.S. and sending company engineers directly to a

customer’s plant in order to assist that customer with

streamlining its facility. See Pl.’s Mem. 13.11 Thus, it is

plaintiff’s contention that the costs absorbed by Union in the

resale of CORE to an unaffiliated U.S. customer should have been

deducted from CEP.

Plaintiff makes similar claims with regard to POSCO, Dongbu

and HYSCO. Based on its construction of the facts, plaintiff

maintains that the record reveals a substantial level of

involvement by the respondents in the resale of CORE to

unaffiliated U.S. purchasers. That is, Mittal insists that the

respondents incurred selling expenses related to the resale of

CORE to unaffiliated buyers in the United States and, thus, in

accordance with 19 U.S.C. § 1677a(d)(1) and 19 C.F.R.

§ 351.402(b), Commerce is required to deduct the costs from CEP.

See Pl.’s Mem. 33, 37–38.

11
Moreover, plaintiff suggests that Union [[

]] Pl.’s Mem. 13.
Consol. Court No. 05-00308 Page 18

Despite plaintiff’s contentions, the court finds that

Commerce supported with substantial evidence its decision to

refrain from deducting the selling expenses identified by

plaintiff as being associated with the resale of CORE to

unaffiliated purchasers in the United States. Commerce must

deduct from the starting price only those expenses that are

“associated with commercial activities in the United States that

relate to the sale to an unaffiliated purchaser . . . .” 19

C.F.R. § 351.402(b). Commerce, however, “will not make an

adjustment [to CEP] for any expense that is related solely to the

sale to an affiliated importer in the United States . . . .” Id.

Here, “Commerce requested and received from respondents

information regarding all business or operational relationships

affecting the development, product, sale or distribution of the

subject merchandise,” verified that information, and found that

respondents’ expenses did not relate to sales to unaffiliated

U.S. buyers. Def.’s Resp. 16. For example, verification of

Dongbu’s questionnaire responses revealed:

[S]ales negotiations begin with Dongbu USA
[Dongbu’s United States affiliate] and the
U.S. customer. Dongbu USA informs Dongbu of
the sales order, then Dongbu inputs the sales
order into Dongbu’s sales system, at which
time the merchandise is produced to order.
Company officials stated that Dongbu ships
directly to the port of the customer’s
request, which is stated in the sales
contract between Dongbu USA and customer.
Company officials added that the shipment
arrangements are made by Dongbu according to
Consol. Court No. 05-00308 Page 19

the terms that are negotiated between the
customer and Dongbu USA. . . . Company
officials also stated that Dongbu USA clears
the merchandise through Customs and arranges
for the payments of the customs broker and
customs duties. . . . Company officials
stated that Dongbu USA generally issues the
invoice to the customer after it has been
shipped, but before it arrives to the United
States. . . . They stated that the customer
pays Dongbu USA . . . .

Dongbu Verification Mem. (Dep’t of Commerce Feb. 1, 2005) at 29;

see also id. at 30 (“We reviewed the list of selling activities

performed by Dongbu and Dongbu USA for each market, and

distribution channel. We also reviewed the list of selling

activities and confirmed with company officials the level of

activity in each market . . . . We noted no discrepancies.”).

The Department understood this evidence to indicate that Dongbu’s

U.S. affiliate, not Dongbu, incurred the selling expenses

resulting from U.S. resales of CORE. Because “[t]here is no

evidence on the record to suggest [Dongbu’s] reported . . .

selling expenses are directly attributable to U.S. sales,”

Commerce concluded that these expenses were not deductible from

CEP. Issues & Decs. Mem. at 10.

Commerce made similar findings with respect to the level of

involvement in resales of CORE to unaffiliated U.S. purchasers

upon verifying Union’s, POSCO’s and HYSCO’s responses and

likewise found the reported incurred expenses to be unrelated to

those sales. See Union Verification Mem. (Dep’t of Commerce Feb.
Consol. Court No. 05-00308 Page 20

1, 2005) at 20; Sales Verification Rep. for POSCO (Dep’t of

Commerce Feb. 1, 2005) at 26; Verification of Sales and Cost

Information Submitted by HYSCO (Dep’t of Commerce Feb. 1, 2005)

at 9.

As discussed above, plaintiff interprets the record evidence

to indicate a higher level of involvement by the respondents in

the resale of CORE than that found by the Department. Commerce,

however, considered the verification data and determined that

there was “no evidence on the record to suggest respondents’

reported . . . selling expenses [were] directly attributable to

U.S. sales.” Issues & Decs. Mem. at 10. In fact, after

verifying respondents’ questionnaire responses, the Department

found that the expenses respondents incurred in selling CORE to

their affiliates in the United States were general and not

related to resales of CORE to unaffiliated buyers. See id.

An examination of Commerce’s analysis and of the evidence

submitted by plaintiff confirms that Commerce was justified in

its findings. That is, plaintiff has not made a case that the

selling functions performed by the parent companies were

mischaracterized by Commerce. In addition, Commerce has

adequately explained its conclusions. Thus, despite plaintiff’s

claim to the contrary, the court finds that the Department

“articulate[d] a[] rational connection between the facts found

and the choice made.” Burlington Truck Lines, Inc. v. United
Consol. Court No. 05-00308 Page 21

States, 371 U.S. 156, 168 (1962).

Based on the foregoing, the court sustains as supported by

substantial evidence Commerce’s refusal to deduct selling

expenses from CEP because the Department reasonably concluded

that respondents’ reported expenses were not directly associated

with resales of CORE to unaffiliated purchasers in the United

States.

III. Dongbu and POSCO CEP Offset Adjustments

Next, plaintiff takes issue with Commerce’s grant of a CEP

offset to normal value to both POSCO and Dongbu to adjust for

their home-market sales having been made at a more advanced stage

of distribution than their sales in the United States.12 See 19

U.S.C. § 1677b(a)(7)(B). Specifically, plaintiff asserts that

“Commerce acted unreasonably when it allowed the . . . ‘CEP

offsets’ to respondents who failed to provide full descriptions

of all selling activities at the CEP [level of trade].” Pl.’s

Mem. 24. For these purposes, CEP sales involve the resale of

12
The Federal Circuit has stated that “the level of trade
adjustment is designed to ensure that the normal value and U.S.
price are being compared . . . at the same level of trade, that
is, at the same marketing stage in the chain of distribution that
begins with the manufacturer.” Micron Tech., Inc. v. United
States, 243 F.3d 1301, 1314 (Fed. Cir. 2001). Indeed, an
adjustment to normal value is necessary because “[e]ach more
remote level of trade must be characterized by an additional
layer of selling activities, amounting in the aggregate to a
substantially different selling function.” Id. (internal
quotation marks, alteration & citation omitted).
Consol. Court No. 05-00308 Page 22

goods from the U.S. affiliate to an unaffiliated U.S. buyer.

Because it is often the case that the U.S. affiliate will absorb

the majority of the selling expenses and perform most, if not all

of the selling functions in the resale to an unaffiliated buyer,

Commerce looks to the “sale to the affiliate, not the affiliate’s

resale transaction” for purposes of determining the CEP level of

trade (“LOT”). Pl.’s Mem. 18 (emphasis in original); see also

Certain Hot-Rolled Carbon Steel Flat Products from Romania, 70

Fed. Reg. 72,984, 72,987 (Dep’t of Commerce Dec. 8, 2005)

(prelim. results) (stating that “[f]or CEP sales, the U.S. level

of trade is the level of the constructed sale from the exporter

to the affiliated importer”).13 Because neither Dongbu nor POSCO

13
While CEP is statutorily defined as “the price at which
the subject merchandise is first sold . . . in the United States
before or after the date of importation by . . . a seller
affiliated with the producer or exporter, to a purchaser not
affiliated with the producer or exporter,” 19 U.S.C. § 1677a(b),
for purposes of comparing the level of trade for CEP sales,
Commerce examines the selling functions performed by the foreign
producer or exporter in selling the merchandise to its U.S.
affiliate. See Preamble to Final Rule, 62 Fed. Reg. 27,296,
27,370 (Dep’t of Commerce May 19, 1997) (“[T]he Department will
base the LOT of CEP on the U.S. affiliate’s starting price in the
United States . . . .”).
In an unrelated investigation, Commerce explained its
procedure for determining the CEP LOT:

First, the indirect selling expenses incurred
in the United States by [U.S. affiliate]
CIC’s sales departments are, pursuant to [19
U.S.C. § 1677a(d)(1)(D)], properly excluded
from the price calculated for the U.S. CEP
sales. Pursuant to this and other . . .
adjustments, [the U.S. affiliate]’s price to
(continued...)
Consol. Court No. 05-00308 Page 23

reported any selling expenses incurred for sales to their U.S.

affiliates, plaintiff insists that the record does not support

Commerce’s grant of a CEP offset.

Commerce is required by statute to make an LOT adjustment to

normal value to account for the price differential resulting from

a respondent’s sales in the home market being made at a more

advanced LOT than its sales to the United States.14 See 19

U.S.C. § 1677b(a)(7)(A). The statute further provides that the

Department only makes an LOT adjustment to normal value if “the

difference in [LOT] . . . is demonstrated to affect price

comparability, based on a pattern of consistent price differences

between sales at different [LOTs] in the country in which normal

value is determined.” 19 U.S.C. § 1677b(a)(7)(A)(ii).

13
(...continued)
its unaffiliated customer (the “starting
price”) is transformed into a constructed
export price, i.e., a constructed equivalent
of a market-based sale by [foreign
producers/exporters] Cinsa or ENASA to CIC
[the U.S. affiliate]. This is the point at
which the level of trade comparison is made.

Porcelain-on-Steel Cookware From Mexico, 63 Fed. Reg. 38,373,
38,378 (Dep’t of Commerce July 16, 1998) (final results).
14
The Federal Circuit has noted that “[n]either the
statute nor the accompanying Statement of Administrative Action
. . . defines the phrase ‘same level of trade.’” Micron Tech.,
243 F.3d at 1305 (citation omitted). Nonetheless, the Court has
interpreted the term “to mean comparable marketing stages in the
home and United States markets, e.g., a comparison of wholesale
sales in Korea to wholesale sales in the United States.” Id.
Consol. Court No. 05-00308 Page 24

Where the record contains insufficient data to make an LOT

adjustment, a CEP offset to normal value may be granted.15

When normal value is established at a[n]
[LOT] which constitutes a more advanced stage
of distribution than the [LOT] of the [CEP],
but the data available do not provide an
appropriate basis to determine under
subparagraph (A)(ii) a[n] [LOT] adjustment,
normal value shall be reduced by the amount
of indirect selling expenses incurred in the
country in which normal value is determined
on sales of the foreign like product . . . .

19 U.S.C. § 1677b(a)(7)(B). Unlike an LOT adjustment, then, the

CEP offset does not demand evidence of an effect on price

comparability. Indeed, the CEP offset can only be used in the

absence of such evidence. See 19 C.F.R. § 351.412(f)(3) (“Where

available data permit the Secretary to determine under paragraph

(d) of this section whether the difference in [LOT] affects price

15
Congress anticipated the situation where the record
would support a finding that sales were made at different levels
of trade but would fall short of establishing that the difference
had a measurable effect on price comparability and thus created
the CEP offset adjustment. See Statement of Administrative
Action, Uruguay Round Agreements Act, accompanying H.R. Rep. No.
103-316, 656, 830–31 (1994), reprinted in 1994 U.S.C.C.A.N. 4040,
4169 (“SAA”).

The constructed export price offset
adjustment will only be made where normal
value is established at a level of trade more
remote from the factory than the level of
trade of the constructed export price; i.e.,
where the [LOT] adjustment . . . if it could
have been quantified, would likely have
resulted in a reduction of the normal value.

Id. at 831, 1994 U.S.C.C.A.N. at 4169.
Consol. Court No. 05-00308 Page 25

comparability, the Secretary will not grant a [CEP] offset. In

such cases, . . . the Secretary will make a[n] [LOT]

adjustment.”).

Finding sales to be at a more advanced stage of distribution

can be shown by evidence that the foreign producer or exporter

performs more selling activities, and thus incurs more selling

expenses, in its home market than it does in the United States.

See Micron Tech., Inc. v. United States, 243 F.3d 1301, 1305

(Fed. Cir. 2001) (“The effect [of the CEP offset] is to reduce

the price of the more advanced level of trade by ‘indirect

selling expenses’ that have been included in the price on the

apparent theory that such costs would not have been incurred if

the sale had been made on a less advanced [LOT].”).

Here, Commerce allowed both Dongbu and POSCO a CEP offset.

In reaching its decision to grant the offset, Commerce examined

the data submitted by each respondent for its home-market and

United States sales.

After comparing Dongbu’s selling functions in the home

market to its selling functions in the United States, the

Department “found a less advanced level of trade in the U.S.

market.” Calculation Mem. for Dongbu (Dep’t of Commerce Aug. 30,

2004) (“Dongbu Offset Mem.”) at 2. For that reason, Commerce

found warranted the grant of a CEP offset in order to “match[]

the U.S. CEP sales to sales at the same level of trade in the
Consol. Court No. 05-00308 Page 26

home market.” Id.

The Department also reviewed POSCO’s reported home-market

selling activities and

granted a CEP offset because we found that
the home market sales16 were at a different
stage of distribution compared to sales to
the U.S. [stage of distribution] with respect
to the [home market] [stage of distribution].
Because the [stage of distribution] of the
U.S. sales is different than the home market
[stage of distribution] and there is no home
market [stage of distribution] comparable to
that of the CEP sales, there is no reliable
basis for quantifying a[n] LOT adjustment
. . . . Therefore, a CEP offset was applied
to [normal value] for the [normal value]-CEP
comparisons.

Id. at 10.

Plaintiff’s principal claim is that Commerce lacked evidence

sufficient to justify a CEP offset. See Pl.’s Mem. 39–40.

Mittal argues that “[i]n its initial questionnaire Commerce

instructed all respondents to identify all selling activities

relevant to claims for any LOT adjustments, ergo CEP

offsets. . . . Both POSCO and Dongbu responded to Commerce’s

questionnaire. They did not, however, provide information

regarding selling activities in sales at the CEP LOT.” Pl.’s

Mem. 40. In other words, plaintiff maintains that the absence of

information regarding respondents’ selling expenses incurred in

16
Commerce calculated net home market price using a
formula set forth in the POSCO Offset Memorandum. The formula
appears to have taken into account various expenses including
packing, credit and rebates. POSCO Offset Mem. at 5–6.
Consol. Court No. 05-00308 Page 27

making CORE sales to their U.S. affiliates should have prompted

Commerce to ask respondents for that data before granting the

respondents a CEP offset.

Plaintiff further argues that this absence of information

does not mean that there were no such expenses and that the

inclusion of these expenses would likely indicate that the home-

market LOT was not more advanced than that at the CEP level. See

Pl.’s Mem. 43. For plaintiff,

both POSCO and Dongbu actively assist their
U.S. affiliates in reselling merchandise in
the United States. Since those resales are
affiliates’ sales, it is fair to conclude
that the Korean parents perform the
activities to promote their own sales to the
affiliates at the CEP LOT. Therefore,
Commerce should have weighed the activities
in the analysis of offset claims.

Pl.’s Mem. 42 (emphasis in original); see also Pl.’s Mem. 42–43.

Despite plaintiff’s arguments, the court finds Commerce’s

grant of a CEP offset to POSCO and Dongbu supported by

substantial evidence and in accordance with law. In particular,

the court concludes that the Department, while not having

sufficient evidence to make an LOT adjustment, reasonably relied

on evidence of the selling functions performed by POSCO’s and

Dongbu’s U.S. affiliates in deciding to grant the companies a CEP

offset.

In making its determination, the Department “review[ed] the

distribution system in each market (i.e., the ‘chain of
Consol. Court No. 05-00308 Page 28

distribution’) [for both Dongbu and POSCO] including selling

functions, class of customer (“customer category”) and level of

selling expenses for each type of sale.” Issues & Decs. Mem. at

11.

With respect to Dongbu, Commerce’s analysis of that

company’s verified questionnaire responses revealed that in its

home market, “Dongbu sold [CORE] through two channels of

distribution to two customer categories, and claimed one level of

trade in the home market.” Dongbu Offset Mem. at 2. Commerce

determined that, although Dongbu reported selling CORE in Korea

through two channels of distribution, “the two home market

channels of distribution . . . constitute one of level of trade.”

Id. Plaintiff does not dispute this finding.

Commerce also analyzed Dongbu’s sales to the United States

for purposes of determining whether an offset was necessary. Of

importance here are two findings. First, as plaintiff

acknowledges, Dongbu completed Commerce’s questionnaire asking

that it “list . . . all the selling and activities performed and

services offered in the U.S. market and the foreign market.”

Pl.’s Mem. 40. Plaintiff claims that Dongbu’s answers were

deficient even though Commerce verified the answers. See Pl.’s

Mem. 40; Def.’s Resp. 21. That is, plaintiff insists that Dongbu

must have had more selling expenses with respect to its sales at

the CEP LOT, i.e., sales to its U.S. affiliate, Dongbu USA, than
Consol. Court No. 05-00308 Page 29

it reported. Commerce, though, in verifying Dongbu’s responses,

found only that “Dongbu’s activities for U.S. sales are limited

to foreign movement expenses.” Dongbu & Union Br. Opp’n Pl.’s R.

56.2 Mot. J. Agency R. 40 (quoting Dongbu’s Section A Resp. at

18). Thus, while plaintiff may insist that there were other

unlisted expenses, the verified evidence on the record indicates

otherwise.

Commerce further found that “Dongbu made only CEP sales

through its U.S. affiliate, Dongbu USA, to unaffiliated customers

in two customer categories, end-users and distributors, and had

only one level of trade for U.S. sales.” Dongbu Offset Mem. at

2. Noting that Dongbu USA “perform[ed] most of the selling

functions in the United States,” Commerce concluded that Dongbu’s

sales in the United States were at a less advanced stage of

distribution than its sales in its home market of Korea, and

granted Dongbu the CEP offset. See id.

After performing the same analysis for POSCO, Commerce found

that the company sold CORE in Korea to three different types of

customer categories through three channels of distribution. See

POSCO Offset Mem. at 9. Commerce concluded that because the

selling activities undertaken in each of the three channels of

distribution “differed only slightly, . . . the home market

channels of distribution constituted one level of trade.” Id. at

10.
Consol. Court No. 05-00308 Page 30

Commerce also “examined the sales to [POSCO’s] affiliated

resellers and examined the selling functions performed by

POSCO . . . on behalf of its affiliate and found only one level

of trade.” Id. The Department found that, “[i]n the U.S.

market, [POSCO] made only CEP sales of subject merchandise,”

through only one channel of distribution. Id. Further, sales

were made by POSCO’s affiliate to unaffiliated U.S. trading

companies. Id. Plaintiff does not dispute these findings.

POSCO, too, submitted timely and complete responses to

Commerce’s questionnaire and the Department subsequently verified

the answers. See POSCO & HYSCO Opp’n Pl.’s R. 56.2 Mot. J.

Agency R. (“POSCO & HYSCO Br.”) 28. POSCO’s questionnaire

responses showed that the company performed a substantial number

of selling activities when selling CORE in Korea, but did not

perform these activities when selling CORE in the United States.

See POSCO & HYSCO Br. 28 (listing home-market selling activities

including, but not limited to “sales and marketing; freight and

delivery arrangement; market research; quality control; computer,

legal, and accounting assistance and business-systems development

assistance; . . . [and] sales force development and end user

contact and support”). Based on this verified information,

Commerce found that “the home market sales were at a different

stage of distribution compared to sales to the U.S. LOT.” POSCO

Offset Mem. at 10.
Consol. Court No. 05-00308 Page 31

As has been noted by defendant, plaintiff’s objections do

not amount to much more than speculation. Indeed, plaintiff’s

contention that Commerce unreasonably granted a CEP offset

because “a reasonable mind would recognize, as a matter of common

commercial sense, that affiliates engage in numerous inter-

company activities when performing complementary and overlapping

roles in marketing goods internationally,” finds no evidentiary

support. Pl.’s Mem. 42–43. Commerce issued Dongbu and POSCO

questionnaires, the respondents provided timely and complete

answers, the Department then verified those responses and found

no discrepancies. As a result, Commerce determined that the

hypothetical costs Mittal insisted had to exist simply did not.

Further, plaintiff’s related claim that Commerce lacked

sufficient evidence to grant the CEP offset because of Dongbu’s

and POSCO’s incomplete submissions is directly contradicted by

Commerce’s verification of the companies’ questionnaire

responses, which revealed no inconsistencies and which provided

sufficient evidence with respect to selling activities in both

the home and U.S. markets. The court cannot, therefore, credit

plaintiff’s unsubstantiated assertion that commercial realities

render insufficient the evidence Commerce relied upon in making

its decision to grant Dongbu and POSCO a CEP offset.

Thus, the court sustains as supported by substantial

evidence and in accordance with law the Department’s grant of a
Consol. Court No. 05-00308 Page 32

CEP offset to both POSCO and Dongbu.

IV. Duty Drawback Adjustment

Plaintiff further contends that Commerce should not have

allowed for a duty drawback adjustment to CEP because it claims

the Korean drawback system is susceptible to manipulation.17 As

part of this claim, plaintiff maintains that Commerce’s current

standard for making drawback adjustments amplifies the potential

for distorted dumping margins on Korean products, in part,

because a Korean exporter is not required to allocate its total

rebates over all of its shipments. Mittal’s specific complaint

is that the Department acted unlawfully by refusing to ask

respondents for further data thus “allowing for fair and

appropriate allocations” of the rebate received to the total lot

of respondents’ shipments of CORE. Pl.’s Mem. 45 (emphasis

omitted).

The antidumping statute provides that “[t]he price used to

establish . . . [CEP] shall be . . . increased by . . . the

17
Generally, a “drawback” is “[a] government allowance or
refund on import duties when the importer reexports imported
products rather than selling them domestically.” Black’s Law
Dictionary 532 (8th ed. 2004); see also E.I. du Pont Nemours &
Co. v. United States, 24 CIT 1045, 1046 n.2, 116 F. Supp. 2d
1343, 1345 n.2 (2000) (“[D]uty drawback” generally, is the refund
of duties paid on goods imported into the United States when
those goods, or domestic goods of the same kind and quality, are
used in the manufacture or production of articles which are
subsequently exported.”).
Consol. Court No. 05-00308 Page 33

amount of any import duties imposed by the country of exportation

which have been rebated, or which have not been collected, by

reason of the exportation of the subject merchandise to the

United States . . . .” 19 U.S.C. § 1677a(c)(1)(B). Based on the

statute, Commerce has created a two-prong test that must be

satisfied prior to the grant of a drawback adjustment. The first

prong requires the exporter to establish that “the import duty

and rebate are directly linked to, and dependent upon, one

another.” Far East Mach. Co. v. United States, 12 CIT 972, 974,

699 F. Supp. 309, 311 (1988) (internal quotation marks & citation

omitted). The second prong demands that “the company claiming

the adjustment [must] demonstrate that there were sufficient

imports of imported raw materials to account for the duty

drawback received on the exports of the manufactured product.”

Id., 699 F. Supp. at 311; see also Issues & Decs. Mem. at 13.

For over twenty years, Commerce has consistently applied, and

this Court has consistently upheld, this test. See, e.g.,

Carlisle Tire & Rubber Co. v. United States, 11 CIT 168, 171, 657

F. Supp. 1287, 1290 (1987); Far East Mach. Co. v. United States,

12 CIT 428, 431–33, 688 F. Supp. 610, 612 (1988) (citation

omitted); Hornos Electricos de Venezuela, S.A. v. United States,

27 CIT 1522, 1525, 285 F. Supp. 2d 1353, 1358 (2003); Wheatland

Tube Co. v. United States, 30 CIT , , 414 F. Supp. 2d 1271,

1286–87 (2006).
Consol. Court No. 05-00308 Page 34

Here, following verification, Commerce found that the

respondents had satisfied the two-prong test. See Issues & Decs.

Mem. at 13. Mittal does not fault this finding. Rather,

plaintiff questions the utility of the test as applied to exports

from Korea. According to plaintiff, “Korea’s duty drawback law

effectively allows exporters to choose the export shipments on

which they base drawback claims on exportations,” which in turn

permits an exporter to manipulate its dumping margin. Pl.’s Mem.

24. That is, for plaintiff, if an exporter is allowed to apply

its drawback claims solely to shipments intended for the United

States, CEP increases artificially and the dumping margin

decreases. Plaintiff insists that this potential for distorted

results should have induced the Department to ask respondents for

additional specific information relating to their drawback

claims, which, in turn, Commerce could have used “to determine

whether drawback claims were in fact disproportionate and

excessive.” Pl.’s Mem. 46.

In essence, Mittal seeks the addition of a third prong to

Commerce’s current two-prong test. That is, Mittal believes that

the opportunity for margin manipulation would diminish if an

exporter were required to demonstrate that it had allocated its

rebates across all of its shipments. Plaintiff observes that, as

in the United States, the Korean drawback scheme does not require

such an allocation and thus opens the door for inaccurate dumping
Consol. Court No. 05-00308 Page 35

calculations. In Mittal’s view:

Although unquestionably lawful in Korea, the
Korean system makes it possible to manipulate
U.S. antidumping results. . . . We can
assume that Korean “Producer X” produces only
one product, CORE, and that it uses steel
scrap as the basic input. We can further
assume that “X” imports 50 percent of its
scrap consumption (paying import duties on
the same) and obtains the balance locally.
We can finally assume that “X” sells 50
percent of its total production for export to
the United States and 50 percent to Canada.
Under these imagined circumstances, in
conjunction with the Korean law, “X” could
limit its claims for drawback solely to
shipments to the United States while claiming
nothing on shipments to Canada – with U.S.
antidumping motivations in mind.

Pl.’s Mem. 44–45. Thus, plaintiff insists that a required

shipment-wide allocation of drawback would eliminate the

distortion of dumping margins and maintain the integrity of the

antidumping statute.

The court finds that Commerce’s two-prong test is a

reasonable interpretation of 19 U.S.C. § 1677a(c)(1)(B) and that

it properly applied the test to the Korean respondents in this

case. As noted, pursuant to 19 U.S.C. § 1677a(c)(1)(B), there

are two requirements for adjusting upward CEP based on rebated

import duties. First, there must be “import duties imposed by

the country of exportation . . . .” 19 U.S.C. § 1677a(c)(1)(B).

Second, those duties must either be rebated or not collected by

the exporting country “by reason of the exportation of the

subject merchandise to the United States.” Id. As this Court
Consol. Court No. 05-00308 Page 36

has held previously, nothing in the statute requires an exporter

to demonstrate that it allocated its rebated or non-collected

duties across the totality of its subject shipments. See Far

East Mach. Co., 12 CIT at 979, 699 F. Supp. at 315 (finding that

Commerce’s “approach is not an unfair way of proceeding,” and

that the “method seems reasonably calculated to arrive at a

proper adjustment to price”); Avesta Sheffield, Inc. v. United

States, 17 CIT 1212, 1216, 838 F. Supp. 608, 612 (1993) (“As a

matter of policy in drawback cases, [Commerce] does not require

exporters to account for a sufficient amount of imported product

to cover all products sold to third countries, as well as to the

United States.”). Thus, the statute and the two-prong test put

the emphasis on proof of a direct link between the rebate of the

import duty and on evidence of sufficient imports to account for

the duty drawback and the exports of subject merchandise. The

court, therefore, agrees with defendant that “[t]here is no legal

basis for the argument that Commerce should not make a duty

drawback adjustment unless it can allocate the total pool of duty

drawback on a proportional basis among all countries to which

respondents export the subject merchandise.” Def.’s Resp. 24;18

18
The court notes that Commerce has sought public comment
on the two-prong test. See Duty Drawback Practice in Antidumping
Proceedings, 70 Fed. Reg. 37,764 (Dep’t of Commerce June 30,
2005) (request for comments). Plaintiff claims that “[i]f
Commerce’s practice might very well change, Mittal should get the
benefit now, not just in future reviews.” Pl.’s Mem. 48. As
(continued...)
Consol. Court No. 05-00308 Page 37

see also Pesquera Mares Australes Ltda. v. United States, 266

F.3d 1372, 1382 (Fed. Cir. 2001) (“[S]tatutory interpretations

articulated by Commerce during its antidumping proceedings are

entitled to deference under Chevron.”).

In addition, the court finds that the Department supported

with substantial evidence its decision to make an upward

adjustment to CEP to account for the drawback respondents

received from the Korean government on their imports of raw

materials. Commerce verified that respondents received drawback

for their imports of raw materials used to produce the subject

merchandise and that the amount of raw materials imported covered

the amount of the drawback. See Issues & Decs. Mem. at 13. In

other words, the Department reasonably concluded that respondents

satisfied the two-prong test and, thus, were entitled

to the CEP adjustment.

Based on the foregoing, the court sustains as supported by

substantial evidence and otherwise in accordance with law

Commerce’s duty drawback adjustment to respondents’ U.S. price of

CORE.

18
(...continued)
yet, however, Commerce has not altered its treatment of duty
drawback adjustments. Thus, “Commerce’s potential rulemaking has
no effect here.” Rhone-Poulenc, Inc. v. United States, 20 CIT
573, 584 n.5, 927 F. Supp. 451, 461 n.5 (1996).
Consol. Court No. 05-00308 Page 38

V. Section 201 Safeguard Duties

Plaintiff next insists that Commerce erred by declining to

deduct from CEP certain duties imposed on imports of steel into

the United States pursuant to Section 201 of the Trade Act of

1974, 19 U.S.C. § 2251 (“Section 201 Duties”).

In the Final Results, Commerce determined that the Section

201 Duties were not deductible from CEP under 19 U.S.C.

§ 1677a(c)(2)(A). Pursuant to that provision, when calculating

dumping margins, Commerce reduces U.S. price by “the amount, if

any, included in such price, attributable to any additional

costs, charges, or expenses, and United States import duties,

which are incident to bringing the subject merchandise from the

original place of shipment in the exporting country to the place

of delivery in the United States . . . .” 19 U.S.C.

§ 1677a(c)(2)(A) (emphasis added). Based on its interpretation

of the phrase “United States import duties,” Commerce customarily

deducts from CEP “normal customs duties”19 but does not deduct

either unfair trade duties or Section 201 Duties.

With respect to Section 201, that provision “permit[s] the

President of the United States to impose safeguard measures in

19
Commerce apparently understands the phrase “normal
customs duties” to include, inter alia, import duties as set out
in the Harmonized Tariff Schedule of the United States and the
Harbor Maintenance Tax. In other words, Commerce deducts from
CEP those permanent, generally applicable duties fixed at the
time of importation.
Consol. Court No. 05-00308 Page 39

reaction to threats posed to domestic industry by identified

imported items.” Wheatland Tube Co., 30 CIT at , 414 F. Supp.

2d at 1272 n.1. For example, the President “may, for purposes of

taking action under [19 U.S.C. § 2253(a)(1)] . . . proclaim an

increase in, or the imposition of, any duty on the imported

article . . . .” 19 U.S.C. § 2253(a)(3). The President may take

action, however, only “[i]f the United States International Trade

Commission [(“ITC” or “Commission”)] determines under [19 U.S.C.

§ 2252(b)] that an article is being imported into the United

States in such increased quantities as to be a substantial cause

of serious injury, or the threat thereof, to the domestic

industry . . . .” 19 U.S.C. § 2251(a). Thus, the President may

not act unilaterally to increase duties on imports. Rather,

there must first be an affirmative serious injury, or threat of

serious injury finding from the ITC.

At issue here is the 2002 Presidential Proclamation that

imposed duties to counteract a surge in steel imports. On

December 19, 2001, pursuant to 19 U.S.C. § 2252, the Commission

submitted to the President its affirmative determination that

certain steel products were “being imported into the United

States in such increased quantities as to be a substantial cause

of serious injury, or threat of serious injury, to the domestic

industries producing like or directly competitive articles.”

Presidential Proclamation 7529 To Facilitate Positive Adjustment
Consol. Court No. 05-00308 Page 40

to Competition From Imports of Certain Steel Products

(“Proclamation 7529”), 67 Fed. Reg. 10,553 (Mar. 5, 2002). As a

result, on March 5, 2002, the President, pursuant to 19 U.S.C.

§ 2253(a)(3)(A), imposed a duty of 15 percent ad valorem on,

among other things, imports into the United States of cold-rolled

steel “for a period of 3 years plus 1 day . . . .” Proclamation

7529, 67 Fed. Reg. at 10,555. This Section 201 Duty applied to

the CORE imports into the United States that were the subject of

the instant review. Upon entering their merchandise, respondents

paid to U.S. Customs and Border Protection (“Customs”) the

Section 201 Duty. There is no dispute over the amount of the

duty charged, nor is there any complaint that respondents failed

to pay the duty owed.

Here, as in the past, the Department concluded it would not

deduct Section 201 Duties from CEP

because 201 duties are not “United States
import duties” within the meaning of the
statute, and to make such a deduction
effectively would collect the 201 duties a
second time. Our examination of the
safeguard[] and antidumping statutes, and
their legislative histories indicates that
Congress plainly considered the two remedies
to be complementary and, to some extent,
interchangeable. Accordingly, to the extent
that 201 duties may reduce dumping margins,
this is not a distortion of any margin to be
eliminated, but a legitimate reduction in the
level of dumping.

Issues & Decs. Mem. at 15.
Consol. Court No. 05-00308 Page 41

Mittal insists that Commerce acted unreasonably in not

deducting the Section 201 Duties from U.S. price. Plaintiff’s

principal argument is that Section 201 Duties are closer to being

normal customs duties than they are to antidumping duties and

thus constitute “United States import duties,” which must be

deducted from CEP. See Pl.’s First Supplemental Br. 3. While

plaintiff does not dispute Commerce’s practice of not deducting

antidumping and countervailing duties from U.S. price under 19

U.S.C. § 1677a(c)(2)(A), it maintains that Section 201 Duties are

not of the same nature as those duties. In plaintiff’s view,

Section 201 Duties are more akin to normal customs duties because

they share a common purpose, i.e., “both types of duties are

protective in nature.” Pl.’s Supplemental Br. 3.

Since the completion of briefing in this case, the Federal

Circuit has considered the appeal of this Court’s decision in

Wheatland Tube Co., which held that Section 201 Duties must be

deducted from United States price when calculating a respondent’s

dumping margin under 19 U.S.C. § 1677a(c)(2)(A). Wheatland Tube

Co., 30 CIT at , 414 F. Supp. 2d at 1285–86. In reversing

Wheatland Tube Co., the Federal Circuit made two related

findings. First, it found that the Department’s “interpretation

that ‘United States import duties’ do not include § 201 safeguard

duties was the result of its formal notice-and-comment rulemaking

process,” and thus that Commerce’s interpretation “is entitled to
Consol. Court No. 05-00308 Page 42

deference as required by . . . [Chevron U.S.A. Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984)] if its

interpretation is reasonable.” Wheatland Tube Co. v. United

States, Nos. 2006-1524, 2006-1525, 2007 WL 2119824, at *4 (Fed.

Cir. July 25, 2007). Second, it concluded that,

[i]n light of the legislative history of the
Antidumping Duty Act of 1921, the
similarities between antidumping duties and
§ 201 safeguard duties, and the likelihood
that deducting § 201 safeguard duties from
the [United States price] would result in
collecting a double remedy, we hold that
Commerce’s interpretation that “United States
import duties” does not include § 201
safeguard duties for the purposes of
determining the [United States price] and
calculating the dumping margin is reasonable.

Wheatland Tube Co., 2007 WL 2119824, at *7. Thus, based on the

Federal Circuit’s holding in Wheatland Tube Co., the court

sustains as reasonable Commerce’s interpretation of “United

States import duties” to exclude Section 201 Duties and its

decision to not deduct those duties from United States price.

CONCLUSION

Based on the foregoing, the court sustains Commerce’s Final

Results. Judgment shall be entered accordingly.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: August 1, 2007
New York, New York
 UNITED STATES COURT OF INTERNATIONAL TRADE

:
MITTAL STEEL USA, INC. :
(formerly INTERNATIONAL :
STEEL GROUP, INC.), :
:
Plaintiff, :
:
v. :
:
UNITED STATES, : Before: Richard K. Eaton, Judge
:
Defendant, : Consol. Court No. 05-00308
: Public Version
and :
:
UNION STEEL MANUFACTURING :
CO., LTD.; DONGBU STEEL CO., :
LTD.; POSCO; and HYUNDAI :
HYSCO CO., LTD., :
:
Deft.-Ints. :
:

JUDGMENT

This case having been submitted for decision and the Court,

after deliberation, having rendered a decision therein; now, in

conformity with that decision, it is hereby

ORDERED that the United States Department of Commerce’s

final results of the tenth administrative review of the

antidumping duty order applicable to imports into the United

States of CORE from the Republic of Korea are sustained; and it

is further

ORDERED that this case is dismissed.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: August 1, 2007
New York, New York
 ERRATUM

Mittal Steel USA, Inc. (formerly International Steel Group, Inc.)
v. United States, Consol. Court No. 05-00308, Slip Op. 07-117,
dated August 1, 2007.

Page 1: The name “Julie C. Mendoza” is added after the name
“Brady W. Mills” as counsel for defendant-intervenors
Union Steel Manufacturing Co., Ltd. and Dongbu Steel
Co., Ltd.

September 17, 2007