Commerce Failed to Make Fair Comparison Between CEP, Home Market Price in AD Review, CIT Rules

"Universal is pleased that the Department of Commerce will have an opportunity to reconsider whether Universal sold the merchandise in the home market at two different levels of trade and whether a level-of-trade adjustment is required to achieve a fair comparison between Universal’s U.S. sales and normal value," Robert Gosselink, counsel for the plaintiffs told Trade Law Daily.

The plaintiffs, made up of Universal Tube, THL Tube and Pipe Industries and KHK Scaffolding and Framework (Universal) -- three affiliates treated as a single respondent -- challenged the final results of the antidumping duty administrative review on circular welded carbon-quality steel pipe from the United Arab Emirates. After deciding to use CEP for Universal's U.S. sales since they were all made through one of two affiliated resellers, Commerce made adjustments to the resellers' price to get the CEP by deducting reseller profit and selling expenses. This appeared to have resulted in a reduction in the level of trade, Stanceu pointed out.

Commerce then found that there was only one level of trade in the plaintiffs' UAE sales. Universal, though, said that there were actually two levels of trade: sales made directly to unaffiliated customers and reviewed sales made by affiliated resellers to unaffiliated customers. Commerce used the indirect sales to compare against the CEP and find normal value, refusing to perform either a LOT adjustment or a CEP offset. Taking their case to the trade court, the plaintiffs argued that Commerce should have identified the two LOTs based on more and different selling activities.

In the opinion, Stanceu held that the case should be sent back to Commerce since the agency "failed to confront the central issue raised by plaintiffs’ claim," and that the agency ignored detracting evidence placed on the record by the plaintiffs. On the former point, Stanceu ruled that there was no discussion of how a "fair comparison" was reached by grouping all the home market sales together within the same level of trade as the CEP sales in the U.S. Instead, Commerce just found that the plaintiffs' and affiliated resellers' selling functions "are not sufficiently different" nor at a significantly more intense level.

The judge found this analysis wanting. Stanceu ruled that, on remand, Commerce must perform the analysis laid out by Congress in light of the "fair comparison" standard set up in the Tariff Act of 1930, addressing specifically the validity of comparing the indirect UAE sales with the CEP sales in the U.S. without an adjustment. In this analysis, the agency must explain whether it considers the indirect sales to have been made at a more advanced distribution stage than the CEP sales, the opinion said.

The court further held that Commerce failed to analyze certain record evidence over the LOT adjustment. Commerce held that the plaintiffs and affiliated resellers perform virtually the same selling functions for unaffiliated customers in the UAE, finding that Universal reported a level "6" for sales promotion and advertising for their indirect sales through the resellers. The plaintiffs argued that, while Universal reported a level "6" for advertising for the affiliated resellers, it did not report any promotions or advertising for the producers.

"Commerce did not address the record evidence that the Universal Producers, unlike the resellers, did not engage in any sales promotion and advertising activities," the opinion said. The agency also failed to address detracting evidence over the selling activities in the indirect sales used to find normal value, Stanceu ruled.

(Universal Tube and Plastic Industries v. United States, Slip Op. 22-83, CIT #20-03944, dated 07/15/22, Judge Timothy Stanceu. Attorneys: Robert Gosselink of Trade Pacific for plaintiffs; Robert Kiepura for defendant U.S. government; Roger Schagrin of Schagrin Associates for defendant-intervenor Wheatland Tube Co.)