Slip Op. 02 - 52
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: GREGORY W. CARMAN, CHIEF JUDGE
VIRAJ GROUP, LTD.
Plaintiff,
v.
Court No. 00-06-00291
UNITED STATES OF AMERICA,
Defendant,
and
CARPENTER TECHNOLOGY, CORP.,
et al.,
Defendant-
Intervenors.
[Department of Commerce’s Remand Redetermination, Viraj Group, Ltd. v. United States, Court
No. 00-06-00291, Slip Op. 02-24 (February 26, 2002) is remanded to the Department of
Commerce for reconsideration.]
Ablondi, Foster, Sobin & Davidow (Peter Koenig), Washington, D.C., for Plaintiff.
Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice; Lucius B. Lau, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice; David W.
Richardson, Attorney, Office of Chief Counsel for Import Administration, U.S. Department of
Commerce, of Counsel, for Defendant.
Collier Shannon Scott, PLLC (Robin H. Gilbert, Laurence J. Lasoff), Washington, D.C., for
Defendant-Intervenors.
Dated: June 4, 2002
Court No. 00-06-00291 Page 2
OPINION
CARMAN, Chief Judge: Pursuant to 28 U.S.C. § 1581(c) (2000), this Court has
jurisdiction to review the Department of Commerce’s approach to the Indian rupee’s devaluation
in Final Results of Redetermination Pursuant to Court Remand, Viraj Group, Ltd. v. United
States of America and Carpenter Technology, Corp., et al., Slip Op. 02-24 (CIT February 26,
2002) (Remand Redetermination II). This Court will sustain Remand Redetermination II 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).
BACKGROUND
On February 26, 2002, this Court remanded to the Department of Commerce
(Commerce) the Final Results of Redetermination Pursuant to Court Remand, Viraj Group, Ltd.
v. United States of America and Carpenter Technology, Corp., et al., Slip Op. 01-104 (CIT
August 15, 2001). The Court ordered Commerce: (1) to consider how to apply a currency
conversion methodology that best reaches an accurate dumping margin in this case; (2) if
necessary, to recalculate the Plaintiff’s dumping margin using a methodology that furthers the
congressional goal of accuracy in dumping determinations; (3) to explain if different currency
exchange rates were used in the dumping margin calculations, if the use of different rates was
appropriate, and if not appropriate, to make any necessary corrective calculations; and (4) to
explain the significance of the Plaintiff’s pricing decisions to Commerce’s determinations of
whether the change in rupee valuation in this case constituted a fluctuation to be ignored. On
April 12, 2002, Commerce filed Remand Redetermination II with this Court.
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ANALYSIS
This Court first ordered Commerce to consider how to apply a currency conversion
methodology that best reaches an accurate dumping margin in this case. In response, Commerce
explained that the currency conversion methodology originally applied is “the best for
calculating a fair and accurate dumping margin.” Remand Redetermination II at 3.
Commerce’s explanation is based upon the principle that potential price discrimination
occurs on the date of sale (DOS) to the United States because on that date the producer decides
and fixes the quantity and price of the merchandise. Id. The date of sale is the “date at which
[the producer] assesses its costs and makes its competitive, economic decision to complete the
sale.” Id. at 5. Because dumping occurs on the date of sale, “Viraj’s subsequent currency gains
and losses on the sale following this date . . . are simply immaterial to the Department’s
calculation of dumping margins.” Id. at 5-6. Subsequent currency gains and losses would only
be relevant if Viraj had factored them into its date of sale pricing decisions. Id. at 4. Absent
evidence of “forward-thinking” pricing, Commerce simply uses the exchange rate contemplated
by the seller on the date of sale in order to compare pricing practices between markets. Id. at 3-
4.
Although Commerce’s currency conversion methodology is likely the best for calculating
a fair and accurate dumping margin in many cases, Commerce has not persuaded the Court that
its methodology best reaches an accurate dumping margin in this case. Despite labeling
subsequent currency gains and losses as “immaterial” to its dumping margin determination,
Commerce has in the past recognized their potential to distort dumping margin calculations.
In Policy Bulletin 96-1, Commerce stated, “We are continuing to examine the application of the
[exchange rate] model in situations where the foreign currency depreciates substantially against
Court No. 00-06-00291 Page 4
the dollar over the period of investigation or the period of review. In those situations, it may be
appropriate to rely on daily rates.” Notice: Change in Policy Regarding Currency Conversions,
61 Fed. Reg. 9,434, 9,435 n.2 (Mar. 8, 1996) (Policy Bulletin 96-1). Commerce also stated that
“in both investigations and reviews, whenever the decline in the value of a foreign currency is so
precipitous and large as to reasonably preclude the possibility that it is only fluctuating, the
lower actual daily rates will be employed from the time of the large decline.” Id. at 9,436.
Commerce later developed the definition of “precipitous and large” in cases such as
Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip
in Coils From the Republic of Korea, 64 Fed. Reg. 30,664 (June 8, 1999) (Stainless Steel from
Korea), where the won declined 40 percent over two months, and Certain Welded Carbon Steel
Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review, 64
Fed. Reg. 56,759, 56,763 (Oct. 21, 1999) (Pipes and Tubes from Thailand), in which the baht
dropped 18 percent in one day. In those cases, Commerce resorted to the use of daily exchange
rates for currency conversion purposes for home market sales matched to U.S. sales. However,
even where Commerce has not considered a currency devaluation to be “precipitous and large,”
Commerce has addressed a devaluation’s distorting effect upon dumping margin calculations.
For example, in Notice of Final Determination of Sales at Less Than Fair Value: Extruded
Rubber Thread from Indonesia, 64 Fed. Reg. 14,690, 14,693 (Mar. 26, 1999) (Rubber Thread
from Indonesia), the rupiah decreased in value by more than 50 percent over five months.
Commerce considered the decline “steady” and “significant.” Id. Consequently, Commerce
used two price averaging periods to determine whether sales at less than fair value existed
because “using a single averaging period would result in a distortion of the dumping
calculation.” Id.
Court No. 00-06-00291 Page 5
Commerce states that “the facts and circumstances on the record in the instant review do
not motivate any general consideration of the issue of depreciating currencies, as the Court
invites Commerce to do.” Remand Redetermination II at 5. Had the rupee’s devaluation been as
rapid and large as the currency devaluations in Stainless Steel from Korea and Pipes and Tubes
from Thailand, Commerce posits that Viraj would have been one among many market
participants revising their expectations based upon the most current exchange rate data available.
Remand Redetermination I at 3-4. In such a case, Commerce’s dumping margin calculations
would reflect the changed pricing decisions. Id. at 4. However, because Viraj as an individual
market participant provided no evidence of changed pricing as a result of the rupee’s gradual
devaluation, Commerce asserts it need not consider whether the devaluation distorted its
calculations. Id. at 4-5; see also Remand Redetermination II at 4-5.
Despite Commerce’s assertion to the contrary, this Court finds the facts and
circumstances on the record in the instant review do indicate a need to consider the issue of
depreciating currencies in order to reach a fair and accurate dumping margin determination.
Commerce stated there were “no extraordinary aspects to the observed movement in the rupee
between November 3, 1997 and November 30, 1998,” but it also recognized that the 14.6 percent
depreciation of the rupee was not small. Remand Redetermination I at 4-5. Furthermore,
Commerce has acknowledged that, were it to account for the depreciation in its calculations, the
dumping margin would be lower. Id. at 5. The depreciation therefore appears to be substantial
if not precipitous. This Court would find helpful an examination by Commerce of whether a
“substantial” devaluation merits the same treatment given “precipitous and large” devaluations.
Policy Bulletin 96-1 appears to consider two separate scenarios rather than merely the one
presented by Commerce in this case.
Court No. 00-06-00291 Page 6
The steep and precipitous currency declines in Stainless Steel from Korea and Pipes and
Tubes from Thailand may have had a clear effect upon pricing decisions in those cases, but “the
rupee’s downward movement, while small and gradual, appears cumulatively to have had more
than a de minimis effect upon Commerce’s dumping margin calculations.” Viraj Group, Ltd. v.
United States, 193 F. Supp. 2d 1331, 1338 (Ct. Int’l Trade 2002). Viraj’s apparent decision not
to hedge against currency valuation changes does not necessarily reflect a decision to sell below
value. The application of Commerce’s standard currency conversion methodology in this case is
unreasonable where “a more accurate methodology is available and has been used in similar
cases.” Thai Pineapple Canning Ind. Corp. v. United States, 273 F.3d 1077, 1085 (Fed. Cir.
2001). The case before this Court is no different in principle from Stainless Steel from Korea,
Pipes and Tubes from Thailand, and Rubber Thread from Indonesia. This Court therefore
remands once more to Commerce to apply a more accurate currency conversion methodology to
its dumping margin calculations in this case.
This Court also ordered Commerce to explain if different currency exchange rates were
used in the dumping margin calculations, if the use of different rates was appropriate, and if not
appropriate, to make any necessary corrective calculations. Commerce stated that “no currency
conversion is done by the Department” because the Department compares cost data reported in
the home market currency with home market sales in the home market currency. Remand
Redetermination II at 5. However, in the absence of a suitable comparison sale in the
comparison market, Commerce uses cost data to reach a constructed value. In such a situation,
“[t]he appropriate exchange rate is employed to convert the constructed value and compare it to
the U.S. sale just as we would convert a comparison market price.” Id. Currency conversion
does appear, therefore, to be “done by the Department.” However, although Commerce
Court No. 00-06-00291 Page 7
consistently uses the DOS exchange rate throughout the review, such an exchange rate does not
appear to facilitate an accurate comparison in this case.
Finally, this Court ordered Commerce to explain the significance of the Plaintiff’s pricing
decisions to its determinations of whether the change in rupee valuation in this case constituted a
fluctuation to be ignored. The Court is satisfied with Commerce’s explanation of the importance
of Plaintiff’s pricing decisions upon dumping margin determinations. However, it is not
satisfied that Commerce has explained the importance of a producer’s pricing decisions upon
whether the change in currency valuation constitutes a fluctuation to be ignored. The
significance of a producer’s pricing decisions is particularly unclear in this case where a steady,
gradual, but significant devaluation may have affected the normal value of the subject
merchandise after the producer set the export price.
CONCLUSION
The Court does not find Remand Redetermination II to be supported by substantial
evidence on the record, or otherwise in accordance with law. This Court therefore remands once
again to Commerce to (1) apply a currency conversion methodology that reaches a more
accurate dumping margin in this case by accounting for the rupee’s depreciation in Commerce’s
dumping margin calculations; (2) explain to this Court why such a methodology does or does not
further the congressional goal of accuracy in dumping determinations; and (3) explain to this
Court which method it chooses to apply in this case, apply that method, and give an explanation
of its reasons for doing so.
Commerce is directed to file its redetermination with the Clerk of this Court no later than
the close of business on Wednesday, June 19, 2002; any responses by Plaintiffs must be filed
with the Clerk of this Court no later than the close of business on Wednesday, June 26, 2002;
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any rebuttal comments by Defendant and Defendant-Intervenors must be filed with the Clerk of
this Court no later than the close of business on Wednesday, July 3, 2002.
_________________________
Gregory W. Carman
Chief Judge
Dated: June 4, 2002
New York, New York