Slip
Op. 02-24
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE:
GREGORY W. CARMAN, CHIEF JUDGE
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| VIRAJ
GROUP, LTD. |
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Plaintiff,
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v. |
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Court
No. 00-06-00291 |
| UNITED
STATES, |
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Defendant, |
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and |
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| CARPENTER
TECHNOLOGY, CORP., |
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al., |
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| WAREHOUSEMEN'S
UNION, |
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Defendant-Intervenors. |
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| ___________________________________
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| [Plaintiff’s
request that the Department of Commerce’s Final Results of
Redetermination Pursuant to Court Remand be remanded to the Department
of Commerce for reconsideration is granted. Defendant’s request
to sustain the Final Results of Redetermination is denied.] |
| Dated:
February 26, 2002 |
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.
OPINION
CARMAN,
Chief Judge: Exercising jurisdiction pursuant to 28 U.S.C. §
1581(c) (1994), this Court reviews the Department of Commerce’s
(Commerce) 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) (Remand
Determination) to determine whether Commerce’s approach to
the Indian rupee’s devaluation during the administrative review
period, December 1, 1997 through November 30, 1998, is supported by
substantial evidence on the record and otherwise in accordance with
law.
BACKGROUND
In
Plaintiff Viraj Group, Ltd.’s (Plaintiff or Viraj) initial challenge
before this Court, Plaintiff raised the issue of whether the exchange
rate used by Commerce to convert Indian rupees into United States dollars
had created an inaccurate dumping margin in Stainless Steel Wire
Rod From India; Final Results of Antidumping Duty Administrative Review,
65 Fed. Reg. 31,302 (May 17, 2000) (Final Results). Specifically,
Plaintiff argued that use of the November 3, 1997 exchange rate distorted
dumping margin calculations because the rupee’s subsequent devaluation
required Viraj to pay more rupees for imported raw materials. Viraj
ultimately recovered its higher cost of production because the devaluation
caused it to receive more rupees for the U.S. dollar price of its subject
merchandise. Commerce’s use of the earlier exchange rate, however,
failed to reflect this offset and caused an understatement of the rupees
actually received, resulting in a dumping margin.
This
Court remanded this issue to Commerce but sustained the remainder of
the Final Results in Viraj Group, Ltd. v. United States of
America and Carpenter Technology, Corp., et al., 162 F. Supp. 2d
656 (Ct. Int’l Trade 2001) (Viraj I). Specifically, this
Court directed Commerce to: (1) articulate the reasoning behind its
approach to the devaluation of the Indian rupee during the period of
review; and (2) properly address and explain whether Commerce’s
currency conversion methodology resulted in an accurate dumping margin
and, should it be necessary, recalculate such margin as may be required.
On
October 1, 2001, Commerce filed its Remand Determination with
this Court, explaining why it had decided alternative means for accounting
for the Indian rupee’s depreciation were unnecessary. As background,
Commerce discussed two types of exchange rate fluctuations–one
which it ignores, and the other which it adopts. Remand Determination
at 2-3. Under the first, a spot exchange rate that deviates from the
benchmark rate by more than 2.25 percent on a given day is ignored as
unrepresentative of the underlying currency value because the “fluctuation”
is “outside the normal range.” Id. at 2. Under the
second,
where
the currency is depreciating over time, and where the rate of change
in the exchange rate and the overall change are such that the exchange
rate movement clearly is more than just a fluctuation that can be
ignored, i.e., it represents an event signaling a fundamental
change in the underlying value of the currency, the spot rate on a
given day (in the period of currency depreciation) is the best measure
of the new foreign currency value and is therefore the appropriate
exchange rate of [sic] currency conversion purposes for any sale occurring
on that day. Thus, “fluctuation” in this context means “a
change within the normal range.”
Id. at 2-3.
Next,
Commerce distinguished the instant case from two scenarios in which
currency conversion concerns caused market participants to make pricing
decisions based upon anticipated future currency values. In the first
scenario, hyperinflation in Brazil increased prices and costs measured
in home currency units, requiring the respondent’s pricing decisions
to reflect an expected future exchange rate. See Budd Co., Wheel
& Brake Div. v. United States, 746 F. Supp. 1093 (Ct. Int’l
Trade 1990). Commerce reasoned in the Remand Determination that
its calculations in such a situation should reflect the linkage between
hyperinflation, pricing decisions, and anticipated exchange rates. In
the instant case, however, Commerce asserted Indian market conditions
during the period of review did not make it reasonable to think–and
Viraj did not claim–that Viraj had set export price on the basis
of a forward exchange rate. Remand Determination at 3.
In
the second scenario, comprised of two cases, the Korean won fell 40
percent over two months and the Thai baht dropped 18 percent in one
day. Commerce stated that these currencies experienced such rapid and
large drops in value of apparent medium- to long-term duration that
market participants based their changed pricing decisions upon the most
current exchange rate data available–the daily current spot exchange
rate. See Notice of Preliminary Determination of Sales at Less Than
Fair Value: Stainless Steel Sheet and Strip in Coils From the Republic
of Korea, 64 Fed. Reg. 137 (Jan. 4, 1999) (Stainless Steel from
Korea) and Certain Welded Carbon Steel Pipes and Tubes from Thailand:
Final Results of Antidumping Duty Administrative Review, 64 Fed.
Reg. 56,759 (Oct. 21, 1999) (Pipes and Tubes from Thailand).
In contrast, Commerce stated that in this case the rupee’s gradual
change made it less likely that market participants would change their
pricing, thereby giving Commerce no clear basis to view the currency
movement as a fluctuation that could not be ignored. Remand Determination
at 3-4. Further, Viraj, as an individual market participant, provided
no basis for Commerce to invoke its forward exchange rate provision.
Id. at 4-5.
Commerce
concluded:
In the instant case, what the Department found were typical movements
that one would expect of a flexible exchange rate subject to market
vagaries. There were no extraordinary aspects to the observed movement
in the rupee between November 3, 1997 and November 30, 1998, and no
evidence on the record to suggest that the movement was an event or
signal recognized at the time by all market participants as warranting
a change in their pricing behavior. For this reason, the record supports
the Department’s decision to treat the depreciation of the rupee
as a fluctuation that could be ignored in a manner consistent with
the overriding statutory goal of calculating accurate dumping margins.
. . . Viraj’s [sic] makes an opportunistic claim for the Department
to account for rupee depreciation that all agree would lower the calculated
dumping margin. But Viraj’s claim is hardly distinguishable from
a claim based on any of a multitude of changes in other variables
that can occur after sale, but which should not be reflected in the
dumping margin because they have no connection to respondent’s
pricing decisions or the terms and conditions of sale.
Remand
Determination at 5.
Following
Commerce’s filing of its Remand Determination, Plaintiff
filed a Memorandum in Opposition to the Final Results of Redetermination
of the U.S. Department of Commerce (Plaintiff’s Memo). Defendant
then filed a Memorandum in Opposition to Plaintiff’s Memorandum
(Defendant’s Memo).
STANDARD
OF REVIEW
This
Court will sustain Commerce’s Remand Determination 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). In
assessing whether Commerce’s Remand Determination is in
accordance with law, this Court accords substantial weight to Commerce’s
interpretation of the statute it administers. See Floral Trade Council
of Davis, CA v. United States, 888 F.2d 1366, 1368 (Fed. Cir. 1989).
In addition, where Congress has implicitly delegated to an agency on
a particular question, “a court may not substitute its own construction
of a statutory provision for a reasonable interpretation made by the
administrator of an agency.” Chevron U.S.A. Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 844 (1984); see Pesquera
Mares Australes LTDA v. United States, 266 F.3d 1372, 1379-82 (Fed.
Cir. 2001) (applying Chevron deference to a statutory interpretation
articulated by Commerce in a dumping determination). If, however, Commerce’s
position is unreasonable, “deference does the agency no good.”
Thai Pineapple Canning Ind. Corp. v. United States, 273 F.3d
1077, 1083 (Fed. Cir. 2001) (Thai Pineapple).
PARTIES’
CONTENTIONS
Plaintiff’s
Contentions
Plaintiff first contends the Remand Determination “constitute[s]
a mechanical application of exchange rates that defeats the overriding
statutory goal of fair comparisons and accurate margins” because
Commerce’s analysis does not address the effect that an exchange
rate change after the purchase order date has upon Viraj’s actual
costs and money received. (Plaintiff’s Memo at 2.) Here, Plaintiff
argues, the exchange rate change resulted in Viraj actually receiving
more from its customer than the actual cost to Viraj; therefore, no
dumping occurred. Id.
Second,
Plaintiff contends Commerce’s claims as to Viraj’s expectations
are not supported by substantial evidence. Plaintiff states that because
it knew the rupees received would move in tandem with its costs, it
knew that it would ultimately receive more rupees from customer payments
in U.S. dollars to make up for the higher rupees required to pay for
imported raw materials in U.S. dollars. Id. Plaintiff argues
that Commerce defeated these expectations by using the exchange rate
at purchase order date to determine rupees received by Viraj, but the
post-devaluation exchange rate to determine costs. Id. at 2-3.
Third,
Plaintiff contends it is unclear how its expectations would be relevant,
as dumping calculations are based upon actual events rather than speculation.
Id. at 3.
Finally,
Plaintiff contends Commerce has not adequately explained why it departed
from past practice by calculating the dumping margin without using the
rupees actually received. Id. at 3.
Part
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