GGB Bearing Tech. (Suzhou) Co. v. United States

2018 CIT 55

• Court: United States Court of International Trade
• Decided: May 22, 2018
• Docket: 12-00386
• Status: Published

Opinion

Slip Op. 18-55

UNITED STATES COURT OF INTERNATIONAL TRADE

GGB BEARING TECHNOLOGY (SUZHOU) CO., LTD. and STEMCO LP,

Plaintiffs,

v. Before: Timothy C. Stanceu, Chief Judge UNITED STATES, Court No. 12-00386 Defendant,

and

THE TIMKEN COMPANY,

Defendant-Intervenor.

OPINION

[Sustaining a decision responding to court order in litigation contesting a final determination in a new shipper review conducted under an antidumping duty order]

Dated:May 22, 2018

Bruce M. Mitchell, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, N.Y., for plaintiffs GGB Bearing Technology (Suzhou) Co., Ltd. and Stemco LP. With him on the brief were Ned H. Marshak and Dharmendra N. Choudhary.

Tara K. Hogan, Senior Trial Counsel, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant United States. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was James H. Ahrens II, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

William A. Fennell, Stewart and Stewart, of Washington, D.C., for defendant-intervenor The Timken Company. With him on the brief were Terence P. Stewart and Lane S. Hurewitz.

Stanceu, Chief Judge: Before the court is the decision (the “Remand Redetermination”)

issued by the International Trade Administration, U.S. Department of Commerce (“Commerce”

or the “Department”) in response to the court’s opinion and order of December 12, 2017. See Court No. 12-00386 Page 2

Final Results of Redetermination Pursuant to Court Remand (Int’l Trade Admin. Mar. 19, 2018),

ECF No. 103-1 (“Remand Redetermination”); GGB Bearing Tech. (Suzhou) Co. v. United States,

41 CIT __, 279 F. Supp. 3d 1233 (2017) (“GGB I”). The court will enter judgment sustaining

the Remand Redetermination.

I. BACKGROUND

The background of this action is set forth in the court’s prior opinion, which is

summarized and supplemented, as necessary, herein. See GGB I, 41 CIT at __, 279 F. Supp. 3d

at 1235-36.

A. Decision Contested in this Litigation

The administrative decision contested in this litigation was published as Tapered Roller

Bearings and Parts Thereof, Finished and Unfinished From the People’s Republic of China:

Final Results of Antidumping Duty New Shipper Review, 77 Fed. Reg. 65,668 (Int’l Trade

Admin. Oct. 30, 2012) (“Final Results”).

B. The Parties to this Litigation

Plaintiff GGB Bearing Technology (Suzhou) Co., Ltd. (“GGB”) is a Chinese producer

and exporter of tapered roller bearings and parts thereof, finished and unfinished (the “subject

merchandise” or “TRBs”). Compl. ¶ 3 (Nov. 29, 2012), ECF No. 6. Plaintiff Stemco LP is

GGB’s U.S. affiliate and an importer of subject merchandise. Id. Defendant-intervenor The

Timken Company (“Timken”), the petitioner in the investigation that gave rise to the underlying

antidumping duty order, participated in this new shipper review as an interested party. See

Tapered Roller Bearings and Parts Thereof, Finished and Unfinished From the People’s

Republic of China: Preliminary Results of Antidumping Duty New Shipper Review, 77 Fed.

Reg. 32,522 (Int’l Trade Admin. June 1, 2012). Court No. 12-00386 Page 3

C. Procedural History

Commerce issued the antidumping duty order on TRBs from the People’s Republic of

China in 1987. Antidumping Duty Order; Tapered Roller Bearings and Parts Thereof, Finished

or Unfinished, From the People’s Republic of China, 52 Fed. Reg. 22,667 (Int’l Trade Admin.

June 15, 1987). In response to a request from GGB, Commerce initiated a new shipper review

covering shipments of TRBs from China produced and exported by GGB for the period of

June 1, 2010 through May 31, 2011. 1 Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished From the People’s Republic of China: Initiation of Antidumping Duty New Shipper

Review, 76 Fed. Reg. 45,777 (Int’l Trade Admin. Aug. 1, 2011). On October 30, 2012,

Commerce published the final results of its new shipper review, assigning GGB a weighted-

average dumping margin of 12.64%. Final Results, 77 Fed. Reg. at 65,669.

GGB commenced this action to contest certain aspects of the Department’s

determination. See Summons (Nov. 29, 2012), ECF No. 1; Compl. ¶ 1. In its motion for

judgment on the agency record, GGB challenged the choice of record information used to value

two components of the normal value calculation: (1) GGB’s manufacturing overhead, selling,

general, and administrative (“SG&A”) expenses, and profit; and (2) labor hours. See Br. in

Supp. of Pls.’ Rule 56.2 Mot. for J. upon the Agency R. (May 22, 2013), ECF No. 26 (“Pls.’

Br.”). GGB claimed that Commerce erred by relying upon manufacturing wage data from

Thailand in valuing the labor factor of production, as opposed to using record data from the

1 Under section 751(a)(2)(B) of the Tariff Act of 1930, an exporter or producer subject to an antidumping duty order may request a “new shipper” review to obtain an individually- determined weighted average dumping margin, i.e., a margin based on its own U.S. sales of merchandise subject to the order, provided certain conditions are met. 19 U.S.C. § 1675(a)(2)(B). In this case, Commerce determined that GGB qualified as a new shipper and calculated GGB’s margin based on sales during the period of June 1, 2010 through May 31, 2011. Court No. 12-00386 Page 4

Philippines or Ukraine (or, alternatively, an average obtained from the data for those two

countries). Id. at 41. Plaintiffs characterized the Department’s decision to use the Thai data as

“not supported by substantial record evidence” and “contrary to law,” contending that their

preferred labor cost data was more specific to the type of labor used, and therefore represented

the “best available evidence.” Id. at 29.

In GGB I, the court granted in part and denied in part GGB’s motion for judgment on the

agency record. GGB I, 41 CIT at __, 279 F. Supp. 3d at 1253. While sustaining the

Department’s choice of information for valuing GGB’s manufacturing overhead, SG&A

expenses, and profit, id., 41 CIT at __, 279 F. Supp. 3d at 1237-44, the court ordered Commerce

to reconsider its selection of information for valuing GGB’s labor input, id., 41 CIT at __, 279 F.

Supp. 3d at 1244-51.

Commerce filed the Remand Redetermination with the court on March 19, 2018. See

Remand Redetermination. Timken’s comments in support of the Remand Redetermination were

deemed filed on April 23, 2018. See Timken’s Comments on Final Results of Redetermination

Pursuant to Ct. Remand (Apr. 23, 2018), ECF No. 107 (“Timken’s Comments”). On the same

day, GGB notified the court that it would not be filing comments on the Department’s Remand

Redetermination. Letter from GDLSK to Ct. (Apr. 23, 2018), ECF No. 108 (“Pls.’ Letter”).

Defendant filed, on May 3, 2018, a response requesting that the Remand Redetermination be

sustained in full. Def.’s Resp. to Comments on Final Results of Redetermination Pursuant to

Court Remand (May 3, 2018), ECF No. 109 (“Def.’s Resp.”). Court No. 12-00386 Page 5

II. DISCUSSION

A. Standard of Review

The court exercises jurisdiction pursuant to section 201 of the Customs Courts Act

of 1980, 28 U.S.C. § 1581(c), under which the court reviews actions commenced under

section 516A of the Tariff Act of 1930 (the “Tariff Act”), as amended, 19 U.S.C. § 1516a. In

reviewing a final determination (including a redetermination made pursuant to court order), 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).

B. Determining the Normal Value of Merchandise Subject to an Antidumping Duty Order that is Produced in a Non-Market Economy Country

Because GGB produces subject merchandise in China, a country considered by

Commerce to be a non-market economy (“NME”) country, the Department determined GGB’s

margin by comparing the U.S. prices of merchandise produced and exported by GGB with what

it determined to be the “normal value” of that merchandise, which it calculated according to the

special procedures of section 773(c) of the Tariff Act, 19 U.S.C. § 1677b(c). Under these NME

country procedures, which as a general matter avoid reliance on prices or costs within the

non-market exporting country, Commerce ordinarily determines normal value “on the basis of

the value of the factors of production utilized in producing the merchandise and to which shall be

added an amount for general expenses and profit plus the cost of containers, coverings, and other

expenses.” 2 19 U.S.C. § 1677b(c)(1)(B).

2 The factors of production include, inter alia, labor hours, quantities of raw materials, and amounts of energy and other utilities used in producing the merchandise as well as representative capital cost, including depreciation. 19 U.S.C. § 1677b(c)(3). Court No. 12-00386 Page 6

The statute further directs Commerce to value the factors of production using “the best

available information regarding the values of such factors in a market economy country or

countries” that Commerce considers appropriate. Id. In valuing the factors of production

Commerce must “utilize, to the extent possible, the prices or costs of factors of production in one

or more market economy countries that are -- (A) at a level of economic development

comparable to that of the nonmarket economy country, and (B) significant producers of

comparable merchandise.” Id. § 1677b(c)(4).

C. On Remand, Commerce Determined that the Philippines and Ukraine Were Significant Producers of Merchandise Comparable to TRBs

In the final results, Commerce rejected GGB’s argument that the Department should

value the labor input using labor cost data from the Philippines or Ukraine, or both, in part

because “[w]hile the Philippines and Ukraine are noted on the record to be at a comparable level

of economic development to the PRC, we have not selected either of these countries as the

primary surrogate country, nor have we determined that they are significant producers of

comparable merchandise.” Issues and Decision Mem. for the Final Results of the New Shipper

Review of the Antidumping Duty Order on Tapered Roller Bearings and Parts Thereof, Finished

and Unfinished from the People’s Republic of China at 9 (Oct. 19, 2012) (P.R. Doc. 115)

(“I&D Mem.”). In GGB I, the court concluded that Commerce erred in failing to make a finding

as to whether the Philippines or Ukraine, or both, were significant producers of comparable

merchandise. GGB I, 41 CIT at __, 279 F. Supp. 3d at 1249-51. The court reasoned that it was

not permissible for Commerce to determine that the information it relied on to value labor

constituted “best available information” without first determining whether the record information

from the Philippines and Ukraine met the two criteria of 19 U.S.C. § 1677b(c)(4), and if so, then

comparing those data with the potential Thai data sources. Id. The court ruled that this Court No. 12-00386 Page 7

constituted error despite plaintiffs’ having failed to exhaust their administrative remedies as to

the argument because Commerce was required by statute to consider whether the Philippines and

Ukraine were significant producers in response to GGB’s advocating during the review that

Commerce value labor using data from these countries. Id., 41 CIT at __, 279 F. Supp. 3d

at 1247-49, 1251.

In the Remand Redetermination, Commerce considered whether the Philippines and

Ukraine were significant producers of comparable merchandise. Remand Redetermination

at 5-8. In doing so, Commerce noted that “[n]either the statute [i.e., 19 U.S.C. § 1677b(c)(4)]

nor Commerce’s regulations provide further guidance on what may be considered a ‘significant

producer’ or ‘comparable merchandise.’” Id. at 5. Commerce relied on its own policy bulletin

and legislative history to determine the meaning of these terms. Id. at 5-6. Commerce further

noted that the record contains export data from the Philippines and Ukraine for three different

four-digit tariff headings for merchandise included within the scope of the antidumping duty

order. Id. at 6. Commerce decided that heading 84.82 (“Ball or roller bearings, and part

thereof”) was superior to two other headings to determine whether the Philippines and Ukraine

were significant producers of comparable merchandise because heading 84.82 included

“products with a similar physical form that would involve the same extent of processing as the

subject merchandise” and included no other items. Id. at 6-7; see also GGB I, 41 CIT at __,

279 F. Supp. 3d at 1252-53 (stating that other headings are arguably less probative on the issue

of whether the Philippines and Ukraine were significant producers of comparable merchandise).

Record evidence relied upon by Commerce demonstrated that the Philippines and

Ukraine had exports of merchandise under heading 84.82 valued at $16,850,286 and

$97,047,957, respectively, in calendar year 2010. See Remand Redetermination at 7-8. For Court No. 12-00386 Page 8

comparison, Thai exports under heading 84.82 were $340,803,597 for the same calendar year.

Attach. 1 to The Timken Company’s Surrogate Country Comments (Nov. 28, 2011)

(P.R. Doc. 46-47). No party objects to the Department’s conclusion that the Philippines and

Ukraine were both significant producers of comparable merchandise during the period of review.

The court sustains this aspect of the Department’s Remand Redetermination.

D. Commerce Permissibly Relied upon Thai ILO Chapter 6A “Total Manufacturing” Labor Cost Data to Value GGB’s Labor Cost Factor of Production

In the Final Results, Commerce valued GGB’s labor factor of production using record

data from the International Labour Organization’s (“ILO”) Yearbook of Labour Statistics (the

“Yearbook”). Specifically, the Department relied on Thai data for “total manufacturing” labor

rates, as reported in the ILO Yearbook. I&D Mem. at 8-9. Commerce stated that it relied on

“total manufacturing” labor data, as opposed to more industry-specific labor data, because

industry-specific labor cost data for Thailand had not been reported since 2000. Id. at 9. In their

motion for judgment on the agency record, plaintiffs claimed that Commerce erred by relying on

the less industry-specific Thai data as opposed to more industry-specific data from the

Philippines or Ukraine (or, alternatively, an average of the data from the two countries).

Pls.’ Br. 28-36; see also GGB I, 41 CIT at __, 279 F. Supp. 3d at 1246-47. This decision,

according to plaintiffs, resulted in a determination that did not rely on the best available

information. Pls.’ Br. 40.

In GGB I, the court ordered Commerce to “make a new determination of what constitutes

the ‘best available information’ to value the labor input after making a ‘significant producer’

determination as to the Philippines and Ukraine.” GGB I, 41 CIT at __, 279 F. Supp. 3d at 1251.

“Only after making a finding as to the status of the Philippines and Ukraine under the ‘significant Court No. 12-00386 Page 9

producer’ criterion” would Commerce be in a position to determine best available information to

value GGB’s labor input. Id.

In the Remand Redetermination, Commerce, after determining that both the Philippines

and Ukraine qualified under the statute as significant producers of comparable merchandise,

determined anew the selection of best available information to value GGB’s labor input.

Remand Redetermination at 8-10. In making this determination, Commerce considered labor

cost data for the Philippines, Thailand, and Ukraine. Id. In evaluating these sources of record

data, the Department explained that “Commerce’s regulations provide that it will normally value

all FOPs [i.e., factors of production] in a single country.” Id. at 9 (citing 19 C.F.R.

§ 351.408(c)(2)). It also explained the Department’s methodology for valuing the labor input in

NME proceedings. Id. This methodology, announced in 2011, states that in NME country

proceedings the Department “will base labor cost on ILO Chapter 6A data applicable to the

primary surrogate country.” Antidumping Methodologies in Proceedings Involving Non-Market

Economies: Valuing the Factor of Production: Labor, 76 Fed. Reg. 36,092, 36,093 (Int’l Trade

Admin. June 21, 2011). The Remand Redetermination then rejects plaintiffs’ preferred data for

valuing the labor input, stating:

GGB has argued that Commerce should use the Philippine and/or Ukrainian labor data to value its labor FOP as those data are more specific than the Thai labor data, and thus, the “best available information on the record.” However, as stated above, Commerce has found that using industry-specific wages from the primary surrogate country or, where industry-specific wages from the primary surrogate country are unavailable, national wages from the primary surrogate country, is the best approach for valuing the labor input in NME antidumping duty proceedings.

Remand Redetermination at 9. Because Commerce continued to rely on the same information to

value GGB’s labor input in the Remand Redetermination as it had in the Final Results, it made

no change to GGB’s dumping margin. Id. at 11. Court No. 12-00386 Page 10

No party challenges the Department’s determination to continue valuing GGB’s labor

input using Thai ILO wage data from 2005. Timken’s Comments 1-2; Def.’s Resp. 2; see also

Pls.’ Letter (stating plaintiffs would not be filing comments on Remand Redetermination). The

court sustains this aspect of the Remand Redetermination.

III. CONCLUSION For the reasons discussed in the foregoing, the court sustains the Department’s Remand

Redetermination with respect to GGB’s claims and will enter judgment accordingly.

/s/ Timothy C. Stanceu Timothy C. Stanceu, Chief Judge

Dated: May 22, 2018 New York, New York