Appeals from the United States Court of International Trade in consolidated case nos. 08-CV-0380 and 08-CV-0392, Senior Judge R. Kenton Musgrave.
The opinion of the court was delivered by: Dyk, Circuit Judge.
Before BRYSON, DYK, and MOORE, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK.
Concurring opinion filed by Circuit Judge MOORE.
In this antidumping case, plaintiff-appellant Saha Thai Steel Pipe (Public) Company Ltd. ("Saha") and defendants-cross appellants Allied Tube and Conduit Corp. and Wheatland Tube Company (collectively "domestic producers") appeal from a final judgment of the United States Court of International Trade ("Trade Court") which sustained a decision by the Department of Commerce ("Commerce"). Commerce (1) granted Saha a duty drawback adjustment, increasing its export price to reflect the implied cost of exempted import duties; and (2) included the exempted import duties in Saha's cost of production and constructed value. We affirm.
This case concerns the final results issued by Commerce in its administrative review of an antidumping duty order covering carbon steel pipes from Thailand. See Circular Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty Administrative Review, 73 Fed. Reg. 61,019 (Dep't of Commerce Oct. 15, 2008) (period of review: Mar. 1, 2006 -- Feb. 28, 2007) [hereinafter Final Results]. Saha, the sole respondent in the administrative review, is a Thai producer of carbon steel pipes that exports its product to the United States. The domestic producers are interested U.S. manufacturers.
Understanding the nature of the issues in this case requires a brief overview of certain aspects of antidumping law, as defined by the Tariff Act of 1930.
Dumping occurs when a foreign firm sells a product in the United States at an export price ("EP") that is lower than the product's normal value ("NV"); the amount by which NV exceeds EP is the dumping margin. See 19 U.S.C. § 1673. For exporters based in market economy countries such as Thailand, NV is generally calculated to be "the price at which the foreign like product is first sold . . . for consumption in the exporting country . . . ." 19 U.S.C. § 1677b(a)(1)(B)(i). However, in determining that sale price, Commerce may disregard sales made at less than the manufacturer's cost of production ("COP"). Id. § 1677b(b)(1). If no sales in the exporting country remain after disregarding sales below COP, then Commerce will alternatively base NV on the constructed value ("CV") of the merchandise. Id. § 1677b(b)(1). COP and CV are closely related. The major components of COP are (1) the cost of manufacture; (2) "selling, general, and administrative expenses"; and (3) packaging expenses. Id. § 1677b(b)(3). CV generally includes the same or similar elements as COP, but with the additional component of profit. Id. § 1677b(e).
Commerce determines a respondent's dumping margin by calculating the amount by which NV exceeds EP. Commerce generally calculates EP to be the price at which the subject merchandise is first sold to an unaffiliated purchaser in the United States, subject to several possible adjustments. 19 U.S.C. § 1677a. At issue in this case is what is known as the "duty drawback adjustment." The statute provides that EP "shall be . . . increased by . . . the 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 . . . ." Id. § 1677a(c)(1)(B). In other words, if a foreign country would normally impose an import duty on an input used to manufacture the subject merchandise, but offers a rebate or exemption from the duty if the input is exported to the United States, then Commerce will increase EP to account for the rebated or unpaid import duty (the "duty drawback").
The purpose of the duty drawback adjustment is to account for the fact that the producers remain subject to the import duty when they sell the subject merchandise domestically, which increases home market sales prices and thereby increases NV. That is, when a duty drawback is granted only for exported inputs, the cost of the duty is reflected in NV but not in EP. The statute corrects this imbalance, which could otherwise lead to an inaccurately high dumping margin, by increasing EP to the level it likely would be absent the duty drawback. See Hornos Electricos de Venezuela v. United States, 285 F. Supp. 2d 1353, 1358 (Ct. Int'l Trade 2003); see also S. Rep. No. 67-16, at 12 (1921) ("In order that any drawback given by the country of exportation upon the exportation of merchandise shall not constitute dumping, it is necessary also to add such items to the purchase price.").
Saha manufactures carbon steel pipe in Thailand using inputs of hot-rolled steel coil and zinc that it imports into Thailand. The Thai government normally imposes import duties on hot-rolled steel coil (5%) and zinc (3.25%). However, since 1997, Saha has participated in Thailand's bonded warehouse program under which imported materials that are incorporated into final products to be exported are exempt from import duties. Under this program, a manufacturer that imports and stores goods in an approved bonded warehouse need not pay any import duties at the time of entry into Thailand. The duty exemptions become permanent if the manufacturer exports the imported materials-incorporated into finished products or otherwise-within one year.
In the administrative review here, Commerce determined that Saha received duty exemptions under Thai-land's bonded warehouse program for its inputs of hot-rolled steel coil and zinc that Saha incorporated into the carbon steel pipes it exported to the United States. See Final Results at 61019 (adopting Issues and Decision Memorandum for the Final Results of the Administrative Review of the Antidumping Duty Order on Circular Welded Carbon Steel Pipes and Tubes from Thailand, 73 ITADOC 61019, 2008 WL 4619781 (Oct. 6, 2008), available at http://ia.ita.doc.gov/frn/summary/thailand/E8-24481-1.pdf [hereinafter I & D Memorandum]); I & D Memorandum at 3--4. Commerce accordingly granted Saha a duty drawback adjustment pursuant to 19 U.S.C. § 1677a(c)(1)(B) and increased Saha's EP to account for the unpaid duty. Final Results at 6,1019--20; I & D Memorandum at 3-7. In calculating the ...