[00:00:00] Speaker 04:
Shang-Chi Hai-Rae versus United States.

[00:00:05] Speaker 04:
Ms.

[00:00:05] Speaker 04:
Powell, please proceed.

[00:00:07] Speaker 01:
Good morning.

[00:00:07] Speaker 01:
May it please the court.

[00:00:08] Speaker 01:
Brittany Powell of Fox Rothschild on behalf of the appellant Deju Walude, Hardware Products Company.

[00:00:15] Speaker 01:
The mandatory responded in the 2016-2017 administrative review of the anti-dumping duty order on certain steel nails from the People's Republic of China.

[00:00:24] Speaker 01:
The threshold issue in this appeal is whether Congress's application of tax available with an adverse inference with respect to Walu Day's sales produced by its unaffiliated producer Tianjin Lingyu was reasonable.

[00:00:40] Speaker 01:
Commerce conducted an on-site verification of both Walude and two of its unaffiliated suppliers.

[00:00:47] Speaker 01:
During the course of the verification of Tianjin Lingyu, Commerce discovered boxes on Lingyu's facility that were labeled Made in Thailand as a result of finding

[00:01:00] Speaker 01:
these boxes and inferring that it was evidence of a fraudulent evasion scheme, Commerce determined that Lingue's data was no longer verifiable, and that it significantly impeded the proceeding.

[00:01:16] Speaker 03:
It also found that Walude and Lingue- Do I remember correctly that they found just partial adverse facts available?

[00:01:23] Speaker 03:
Is that right?

[00:01:24] Speaker 03:
Reasoning that adverse facts available would be too harsh.

[00:01:28] Speaker 01:
Yes, Your Honor, they found partial adverse facts available with respect to only the sales produced by Lingyu, not the other suppliers.

[00:01:38] Speaker 01:
Commerce also determined that Lingyu and Waalude failed to cooperate to the best of their ability.

[00:01:43] Speaker 01:
At the outset, I wish to note that I was present at this verification, so I watched this discovery unfold in real time.

[00:01:50] Speaker 01:
During the plant tour, Lingyu provided commerce with complete access to its factory.

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They did not prevent them from accessing the packaging portion.

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Are you disputing whether they were properly found to be involved, Ling Yu, in a fraudulent trans-shipment scheme?

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Are you disputing that?

[00:02:08] Speaker 04:
The issue is... It's yes or no.

[00:02:10] Speaker 04:
Are you disputing the fact-finding by commerce that Ling Yu was involved in a fraudulent

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trans-shipment scheme.

[00:02:18] Speaker 01:
I think there is insufficient record evidence to establish that they were involved in a fraudulent trans-shipment scheme.

[00:02:24] Speaker 03:
Did you add that in your opening brief?

[00:02:27] Speaker 01:
We provided in our opening brief and explained Ling Yu's explanation during verification

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They were only the producer of the nails that their unaffiliated exporting customers were the providers of the labels that they sent to the printer and affixed to the boxes.

[00:02:47] Speaker 01:
The head of the factory explained that neither he nor any of the employees spoke English.

[00:02:53] Speaker 03:
And so their role- I think the only thing in the record is that he didn't speak English.

[00:02:57] Speaker 03:
OK, go on.

[00:03:01] Speaker 01:
The issue here, and I wish to note that there is a remedy under the law for allegations of evasion, for investigations of evasion.

[00:03:11] Speaker 01:
That's the Enforce and Protect Act, which provides all of the requisite procedures for finding whether evasion had occurred.

[00:03:19] Speaker 01:
Here, Commerce's obligation and mandate is to calculate dumping margins as accurately as possible.

[00:03:25] Speaker 01:
And they made these findings about Lingue significantly impeding the proceeding and its data being unverifiable without substantial record evidence.

[00:03:36] Speaker 01:
There was no finding that there was no factual support for Commerce's finding that Lingue impeded the proceeding.

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In fact, they had full access to the facility once this discovery was found.

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Commerce requested it and was permitted to take as many pictures as it wished, and then further subsequently evaluated additional documents in Lingue's records.

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There was no evidence or citation in the verification report or elsewhere that Lingue somehow hindered, delayed, or prevented Commerce from conducting its proceeding.

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And so the record does not support a finding of a significant impediment of the proceeding.

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Second, there is insufficient record evidence, rather, commerce's determination that link use information could not be verified is not supported by substantial evidence.

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This discovery happened in the course of the verification.

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where Commerce had reconciled Ling use cost of production with its general ledgers.

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It reconciled all of its data and found no significant discrepancies.

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Except for the finding of these boxes labeled Made in Thailand, it called into question the veracity of the information, which it had previously reconciled with other information provided in Ling's use books and records.

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They were able to trace the inputs from purchase orders to the raw material subledger

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And there are other instances where they were able to reconcile the information provided during the course of the administrative review.

[00:05:13] Speaker 01:
Here, there is no rational nexus between discovering boxes mislabeled Made in Thailand with Ling Yu's reported factors of production data related to Walu Day sales that were exported during the POR.

[00:05:27] Speaker 04:
I'm sorry.

[00:05:29] Speaker 04:
boxes mislabeled made in Thailand.

[00:05:33] Speaker 04:
Is that a fact finding that I'm missing in this case?

[00:05:37] Speaker 04:
Is there a fact finding by commerce that the boxes were mislabeled, that those nails were actually made in China, but the boxes were mislabeled?

[00:05:45] Speaker 01:
When I say mislabeled, so commerce didn't make a fact finding because they didn't investigate this issue.

[00:05:51] Speaker 01:
There was no evasion investigation.

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So I should clarify that the boxes were labeled made in Thailand.

[00:06:00] Speaker 01:
In essence, commerce is punishing Walu-de for this purported evasion in which it had no role and there was no impact on the data that was used to calculate link use factors of production.

[00:06:13] Speaker 01:
We noted in our briefs the timing that these, the finding, the verification occurred in October 2018, which is nearly a year and a half after the period of review in which the data was collected.

[00:06:27] Speaker 03:
And Commerce did say that, and I understand if I remember correctly, Commerce said something like there was evidence, including lots of dust and different things on the boxes that would suggest that this was not something that was new, but rather that it was old.

[00:06:43] Speaker 03:
And they did take that argument into account.

[00:06:46] Speaker 03:
Is that right?

[00:06:47] Speaker 01:
They did make that statement.

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The photos are on the record.

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When you look at the photos, there's no evidence of cobwebs on the boxes.

[00:06:55] Speaker 01:
I understand.

[00:06:56] Speaker 03:
I'm not a fact finder, though, right?

[00:06:59] Speaker 03:
And so to me, I was more interested in your thoughts on Mueller, for example, and whether that would make it so adverse fact available would be applicable to this exporter.

[00:07:12] Speaker 01:
I think Mueller is distinguishable in the sense that in Mueller, there was an exporter who did not cooperate by providing product-specific factors of production data.

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That's not the case here.

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Ling, you provided that information.

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So Commerce has a policy of applying facts available to induce parties to participate and cooperate.

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There's no position here that

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that applying AFA would further induce Lingue to cooperate.

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They did cooperate.

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Walude cooperated.

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They provided documents and responses to all of their information requests.

[00:07:50] Speaker 04:
Do you want to save any rebuttal time at all, Ms.

[00:07:53] Speaker 01:
Teller?

[00:07:53] Speaker 01:
Yes, Your Honor.

[00:07:55] Speaker 04:
Mr. Is it Brophy?

[00:07:57] Speaker 04:
Mr. Brophy?

[00:07:59] Speaker 06:
Thank you.

[00:08:00] Speaker 06:
And please, the court.

[00:08:02] Speaker 06:
Our issue is regarding the separate rate, or as the department likes to call it, the sample rate, assigned to cooperative respondents that were not selected for an individual examination.

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Now, Commerce takes the position that because this is an administrative review and because they use sampling and selecting the mandatory respondents, that they can include an AFA rate in the average assigned to the cooperative separate rate companies.

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despite the fact that there were above-dominimous rates available for commerce to use in the calculation.

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And to clarify, there were three companies.

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One received an above-dominimous rate based on no facts available.

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Haluda received an above-dominimous rate based on partial facts available.

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The third respondent received a rate based on total adverse facts available.

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And we are challenging the use of that third rate in the average.

[00:09:04] Speaker 06:
Based on two points, one that commerce has not supported its decision by substantial evidence, and also that is contrary to the statute.

[00:09:13] Speaker 04:
uh... uh... uh... uh... uh...

[00:09:24] Speaker 04:
But that is only in the context of investigations, not administrative review.

[00:09:28] Speaker 04:
So what statute is it your belief that's correctly contrary to?

[00:09:32] Speaker 06:
I think our point is that while that portion of the statute does introduce itself as applicable to investigations, the court in Albemarle stated that it was not just based on Congress's discretion.

[00:09:47] Speaker 06:
The statutory framework mandated that it also be applicable to administrative reviews based on... Where did they say that?

[00:09:56] Speaker 04:
One is referring to your best language in Albemarle, which you think held that that statute, which on its face clearly only applies to investigations, is required by law to be applied to administrative reviews.

[00:10:11] Speaker 06:
This Abel-Maro Act 1352-53 states that the statutory framework contemplates that commerce will employ the same methods for calculating a separate and periodic administrative reviews as it does in initial investigations.

[00:10:26] Speaker 04:
I'm sorry, I'm just struggling with where you are reading from.

[00:10:28] Speaker 06:
Oh, maybe I need to double-check the page.

[00:10:33] Speaker 04:
I'm right at the point where 52 and 53 overlap, so what's the difference?

[00:10:57] Speaker 06:
1352 starts with it is true as the government points out.

[00:11:08] Speaker 04:
So it starts out by saying it's true that the statute on its face only applies to investigations, but the framework contemplates commerce will employ the same methods for calculating a separate rate in periodic administrative reviews as it does in initial investigations.

[00:11:23] Speaker 04:
and then it goes on to say indeed for this reason commerce itself has basically employed the same methodology in administrative reviews so what we held in that case is commerce was choosing to use the same methodology and we found that to be consistent with the statute well I think

[00:11:44] Speaker 06:
Under our interpretation, I think we're saying that what we understood the court to be saying is that they're saying that the statute was right as a whole when you consider that those statutes talk about administrative reviews, indicates use of similar language that's accomplished to determine the dumping margin and calculate the amount of anti-dumping duty as well as the court's

[00:12:08] Speaker 06:
Statement in footnote seven, that the text of the SAA is contrary to the department's position, saying that the text of the SAA starts with, for all producers and explorers.

[00:12:21] Speaker 04:
So let me just tell you my take on this.

[00:12:24] Speaker 04:
My take on this is the statute is absolutely silent as to whether to apply a similar exception for the minimum zero and AFA rates to administrative reviews.

[00:12:34] Speaker 04:
The statute speaks to investigations.

[00:12:36] Speaker 04:
There's good and sound logic in saying, why limit it to investigations?

[00:12:40] Speaker 04:
Why not include administrative reviews?

[00:12:42] Speaker 04:
And in fact, it looks like commerce has, in often cases, said it will apply that same concept to administrative reviews.

[00:12:50] Speaker 04:
But in this case, we have an actual Federal Register publication by Commerce where it made the decision to do something different with regard to sampling methodology.

[00:13:00] Speaker 04:
It articulated quite sound, rational, clear bases for why they were doing that, including the fact that there was a lot of gamesmanship going on in this process where people were having themselves excluded for the purpose of thereby driving the rates down.

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And so Congress thought that sampling methodology, it made a factual, rational, empirically based determination

[00:13:28] Speaker 04:
that in the sampling methodology, they should, in fact, include AFA rates.

[00:13:33] Speaker 04:
Feels like a really different situation than Albemarle.

[00:13:35] Speaker 04:
Albemarle was a case where commerce was actually choosing to apply it in both circumstances.

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In our case, Congress pre-litigation

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came out with this sampling methodology publication in the Federal Register, which seems very sound, reasonable, thoughtful, well-founded.

[00:13:52] Speaker 04:
So I mean, the government can probably quote that later somewhere.

[00:13:56] Speaker 04:
But it certainly seems thorough and different.

[00:14:00] Speaker 04:
Why is that not entitled to Chevron deference?

[00:14:03] Speaker 06:
I think even if the court decides that Chevron deference is justified in this case, the decision still has to be supported by substantial evidence.

[00:14:11] Speaker 06:
As our position, that was my other point, is that we're not challenging the methodology that commerce used to select the mandatory respondents.

[00:14:23] Speaker 06:
We are challenging how they calculate a separate rate.

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And in that case,

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They have not provided an adequate explanation as to why inclusion of the AFA rate in the separate is necessary.

[00:14:37] Speaker 03:
In your view, I'm not sure I understand you correctly.

[00:14:39] Speaker 03:
It doesn't matter what the sampling methodology is.

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They were not allowed, in light of that decision on sampling methodology.

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They still couldn't apply the AFA rate.

[00:14:51] Speaker 03:
Right.

[00:14:51] Speaker 06:
And in that decision on the sampling methodology, I mean, in the Federal Register notice, they promulgated, they explained how they were going to do sampling, how they were going to select and manage her respondents.

[00:15:01] Speaker 06:
With respect to this account finished with a separate rate, they said they would deal with it on a case by case basis.

[00:15:07] Speaker 03:
So there was some notice there.

[00:15:09] Speaker 06:
There was some notice there.

[00:15:10] Speaker 06:
And we have challenged whether their use of it is based on substantial evidence.

[00:15:17] Speaker 06:
In this case, they say it's necessary to maintain the statistical validity of the sample.

[00:15:23] Speaker 06:
But they don't provide any citation, any statistical literature, or any statistical principles that makes that true.

[00:15:31] Speaker 00:
So counsel, what is your theory as to how this case should have proceeded?

[00:15:38] Speaker 06:
starting with the investigation?

[00:15:43] Speaker 06:
Starting with the investigation, I don't think they had a choice.

[00:15:46] Speaker 06:
The statute says they can't include an AFA rate in the separate rate, regardless of whether they use sampling or whether they use the largest exporters as the mandatories.

[00:15:59] Speaker 06:
When it gets the review process, I think when they start and they get an AFA rate, like they did in this case,

[00:16:06] Speaker 06:
then they have to explain why this case is different from all the other cases where they can't do it.

[00:16:12] Speaker 06:
They can't do it in investigations even if they use sampling.

[00:16:15] Speaker 06:
The court has held they can't do it in administrative reviews where they choose the largest exporter.

[00:16:19] Speaker 06:
The court has held even when that statutory provision does not apply, even when commerce goes to the other reasonable methods section of the statute, that in almost all cases, this court has held it's not allowed.

[00:16:33] Speaker 04:
But in this case, didn't they, in that sampling methodology public notice, didn't they explain

[00:16:39] Speaker 04:
exactly why, which is this repeated pattern of failure to participate and comply.

[00:16:45] Speaker 04:
And wouldn't the sample in this case actually fully justify and support that rationale?

[00:16:50] Speaker 04:
Because they sampled three people, and two of them ended up with partial or complete AFA rates.

[00:16:56] Speaker 04:
That is sort of

[00:16:57] Speaker 04:
of justifying on its face exactly what commerce was concerned about.

[00:17:03] Speaker 06:
I think this court in Shenzhen, Wuzhen, and I agree it's a different fact pattern.

[00:17:09] Speaker 06:
But the court said that deterrence is not the issue here.

[00:17:14] Speaker 06:
The issue is fairness and accuracy over deterrence.

[00:17:17] Speaker 06:
And I don't know what I'm being deterred from doing.

[00:17:20] Speaker 06:
My client cooperated, but they're still getting a rape that's partially based on adverse facts available.

[00:17:27] Speaker 04:
We wouldn't have... What if there had been a zero or a de minimis in the sample?

[00:17:32] Speaker 04:
You would have legally pulled them in and been happy, right?

[00:17:35] Speaker 04:
You would have been like, yay, one of the threes is de minimis or zero.

[00:17:38] Speaker 04:
Way to go.

[00:17:38] Speaker 04:
That's how you do those.

[00:17:40] Speaker 04:
But don't look at the AFA.

[00:17:41] Speaker 06:
Well, again, that gets us to the other cases decided by this court where we got to the reasonable method part of the section of the statute.

[00:17:48] Speaker 06:
And the cart has said you should rely on the expected method and use the zero.

[00:17:52] Speaker 04:
Just to be clear, is your position that, likewise, commerce should be excluding zeros and minimas?

[00:17:58] Speaker 04:
I want to know that you're consistent in your internal position.

[00:18:02] Speaker 00:
I don't think I would say that.

[00:18:03] Speaker 00:
I don't think it has to be consistent.

[00:18:04] Speaker 04:
Well, then you need to sit down, because your time is up, and that is a hypocritical statement.

[00:18:11] Speaker 06:
Thank you, Your Honor.

[00:18:15] Speaker 04:
So what do you think, Ms.

[00:18:16] Speaker 04:
Bay?

[00:18:17] Speaker 04:
Is he right?

[00:18:18] Speaker 04:
You have to exclude the AFAs, but you've got to include the de minimis and the zeros?

[00:18:21] Speaker 04:
How does that make any darn sense?

[00:18:24] Speaker 02:
Please record, it doesn't.

[00:18:25] Speaker 02:
You would have to include AFA, de minimis, and zero rates.

[00:18:29] Speaker 02:
And I don't think that there is any indication that commerce would not have included zero or de minimis rates had that been part of the sample.

[00:18:37] Speaker 02:
And as Your Honor noted, I don't think we would be here today if they had included zero and de minimis rates.

[00:18:44] Speaker 02:
As Your Honor noted and as the trial court noted, Congress clearly left commerce with a discretion of how to handle AFA rates when calculating the non-examined rate in administrative reviews.

[00:18:56] Speaker 02:
Therefore, Chevron step one does not apply.

[00:19:00] Speaker 02:
We have to proceed to Chevron step two.

[00:19:03] Speaker 02:
And the only question then is whether commerce reasonably exercised its significant gap-filling discretion.

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And it clearly did so here.

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As this court has held before, commerce's methodology is accorded substantial deference.

[00:19:17] Speaker 02:
And as Your Honor noted, and I won't quote directly, but commerce did explain in its sampling methodology why

[00:19:26] Speaker 02:
it uses a sampling methodology.

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And that's when there is evidence to show that the largest respondents are not representative of overall dumping behavior.

[00:19:34] Speaker 02:
And therefore, in order to

[00:19:36] Speaker 02:
more properly reflect that commerce would include both AFA and sample or de minimis rates when calculating the sample rate for non-examined respondents.

[00:19:46] Speaker 02:
And I think that what's interesting here, and you posited the question about zero and de minimis rates, when also applying a different context where there could be a proceeding where there's been a series of reviews where there's been

[00:19:58] Speaker 02:
a consistent zero or de minimis rate, but also a calculated rate, and that zero or de minimis rate wasn't there.

[00:20:05] Speaker 02:
So in that case, one of the respondents could have requested sampling based on that.

[00:20:09] Speaker 02:
And in that case, commerce would have also included zero or de minimis, and that would have been more reflective of the overall dumping behavior.

[00:20:15] Speaker 02:
I'm just going to hit really quickly on one particular issue, which is Appellant's contention that fairness and accuracy are to be Commerce's goals in calculating the non-examined respondents rate.

[00:20:27] Speaker 02:
But here, including the AFA rate, specifically leads to a higher level of accuracy.

[00:20:34] Speaker 02:
As Commerce noted in its respondent selection memo, where it explained its use of the sampling,

[00:20:39] Speaker 02:
at least half of the respondents.

[00:20:41] Speaker 04:
It leads to a higher level of accuracy potentially across the board, but perhaps not with regard to his individual client, right?

[00:20:49] Speaker 02:
And that's why he's here.

[00:20:53] Speaker 02:
It could potentially not be accurate of any given respondent.

[00:20:57] Speaker 02:
But I think the court said in Albemarle that what commerce is trying to do with the non-examined respondents rate is make a reasonable approximation of the- Doesn't the argument that it's not fair with regard to my client go to the whole concept that commerce should just be forbidden from averaging?

[00:21:11] Speaker 04:
Because any time you average, unless everyone is in exactly the same number, somebody's going to be above that number.

[00:21:17] Speaker 04:
Someone's going to be below that number.

[00:21:19] Speaker 04:
Some companies might benefit from it.

[00:21:20] Speaker 04:
Some companies might not lose.

[00:21:22] Speaker 04:
It seems like more of a challenge that commerce is prohibited from averaging.

[00:21:26] Speaker 02:
Yes, Your Honor.

[00:21:27] Speaker 02:
But as the trial court stated in the Lai Zhu case, that's what happens when you average.

[00:21:32] Speaker 02:
And it simply isn't possible for commerce to individually examine every single respondent.

[00:21:37] Speaker 02:
And I think here, appellants.

[00:21:40] Speaker 04:
What about every compliant respondent?

[00:21:41] Speaker 04:
What about every respondent who offers to provide their data and be compliant?

[00:21:47] Speaker 04:
How onerous would that be?

[00:21:49] Speaker 02:
Well, I think in this case, Appellant did not.

[00:21:54] Speaker 02:
It submitted a separate rate application, as did, I think, 21 other companies.

[00:21:57] Speaker 02:
But it did not request voluntary respondent treatment.

[00:22:00] Speaker 02:
So it could have requested voluntary respondent treatment.

[00:22:03] Speaker 02:
And I can't.

[00:22:04] Speaker 04:
What would that implicate?

[00:22:05] Speaker 04:
I don't totally understand that.

[00:22:07] Speaker 04:
If they had requested voluntary respondent treatment, what would that have?

[00:22:10] Speaker 02:
So, asserting a separate rate certification basically means that they're asserting that they're independent from China and they shouldn't be subject to the China-wide overall rate.

[00:22:21] Speaker 02:
But I think, and I haven't dealt too much with voluntary respondent treatment, but requesting to be a voluntary respondent I think is requesting that commerce individually examine it.

[00:22:31] Speaker 02:
And I can't speculate as to whether commerce would have agreed or denied that request.

[00:22:37] Speaker 02:
I think it's done both in other proceedings.

[00:22:40] Speaker 02:
But I think it's telling that they didn't request a voluntary responding treatment.

[00:22:43] Speaker 04:
They were willing to roll the dice on the average until they didn't like the average.

[00:22:47] Speaker 02:
That's our take on it, yes.

[00:22:50] Speaker 02:
And I think in most of the proceedings, Stanley has often requested a voluntary respondent treatment.

[00:22:56] Speaker 02:
But in general, none of the others have.

[00:22:59] Speaker 02:
I can't say for sure whether anyone has.

[00:23:02] Speaker 02:
And I think one of the appellants who I think their counsel didn't argue today, Jean,

[00:23:07] Speaker 02:
is telling.

[00:23:08] Speaker 02:
Jean is one of the respondents here that is complaining about the sample rate of 44.48%.

[00:23:14] Speaker 02:
However, when it was individually examined back in Administrative Review 5, it actually received a rate of 72.52%.

[00:23:21] Speaker 02:
So if we're looking at historical records as any barometer, then Jean actually would have benefited by this sample rate despite complaining that the sample rate was not fair and should not have included AFA.

[00:23:37] Speaker 02:
Just wanted to talk very quickly then about the issue.

[00:23:41] Speaker 04:
If I talk quickly, you can go even faster than you're already going.

[00:23:44] Speaker 04:
I'm going to object, because it's tough to keep up with you.

[00:23:47] Speaker 04:
I apologize, Your Honor.

[00:23:48] Speaker 04:
I'm going to move on to the next issue, but perhaps don't do it even more quickly.

[00:23:52] Speaker 02:
I will attempt to slow down.

[00:23:54] Speaker 02:
I know that.

[00:23:55] Speaker 02:
have a tendency to speak quickly.

[00:23:59] Speaker 02:
So I think first going to the issue of whether this evidence of Tianjin's fraudulent transshipment scheme could merit AFA with regard to Tianjin, I think this court's decision in the Papier-Fabrique case, I'm not sure if I'm pronouncing that correctly, it basically held that where there's evidence of a fraudulent

[00:24:19] Speaker 02:
scheme that this renders that respondent's information wholly unreliable and unusable.

[00:24:25] Speaker 02:
So in that case, finding evidence of fraud was enough to find that respondent uncooperative and justify the use of AFA.

[00:24:33] Speaker 02:
So that, I think, justifies Commerce's findings with regard to Tianjin.

[00:24:38] Speaker 02:
The other question then regards whether Commerce could properly attribute that information to Deju in finding partial AFA.

[00:24:47] Speaker 02:
I think it's telling that appellants consider this a punitive measure to Deju.

[00:24:52] Speaker 02:
However, commerce specifically addressed that and the trial court specifically addressed that and found that here commerce only assessed, as Judge Sewell noted, partial AFA to Deju and only for the information that was

[00:25:05] Speaker 02:
submitted by Tianjin.

[00:25:06] Speaker 02:
And I think that demonstrates that Commerce was not acting punitively, but rather was acting in accordance with the statute and in accordance with this court's case in Mueller in attributing the AFA on Tianjin's part to Deju, but only for that part of the sales that had to do with Deju.

[00:25:26] Speaker 02:
Unless this court has other questions, I would see the rest of my time to Mr. Gordon.

[00:25:30] Speaker 02:
Thank you.

[00:25:31] Speaker 02:
Thank you.

[00:25:34] Speaker 04:
Mr. Gordon, please proceed.

[00:25:37] Speaker 05:
Good morning.

[00:25:37] Speaker 05:
May it please the court?

[00:25:38] Speaker 05:
Thank you.

[00:25:39] Speaker 05:
I'd like to pick up where Ms.

[00:25:40] Speaker 05:
Bae left off speaking about the Deju, Waluda, and Lingyu issue.

[00:25:45] Speaker 05:
Just to confirm, as Judge Stoll had commented, that the only claim on the record was that the plant manager claimed not to speak English.

[00:25:53] Speaker 05:
And we pointed that out, because that's been described differently in some of the briefing before the court.

[00:25:58] Speaker 05:
The other point on Lingyu that I'd like to emphasize is that Commerce's decision that it could not rely on their information submitted, and granted,

[00:26:07] Speaker 05:
They had an ostensibly complete reporting.

[00:26:11] Speaker 05:
At verification, when Commerce discovered the evidence that's on the record of this obvious trans-shipping scheme, old boxes, new boxes, boxes marked with purchase orders, all marked made in Thailand, as we discussed in our brief, if you read the verification report, it's clear that the company was scrambling and trying to tell Commerce whatever it could to try to weasel its way out of the situation it found itself in.

[00:26:36] Speaker 05:
On that basis alone, commerce could reasonably conclude that the company's information is not reliable when they are being told.

[00:26:44] Speaker 05:
a number of different evolving things at verification when they've discovered this apparent transshipment scheme.

[00:26:50] Speaker 05:
And as counsel had claimed that the only appropriate course of action for commerce was to maybe self-initiate a NEPA proceeding, that's not the only option commerce has.

[00:27:03] Speaker 05:
In fact, as commerce stated in its issues and decision memorandum, it was referring the information over to customs.

[00:27:09] Speaker 05:
But at the same time,

[00:27:10] Speaker 05:
it had to make a determination concerning the veracity, the reliability of the information in front of it.

[00:27:16] Speaker 05:
And it did so, in our opinion, reasonably and correctly.

[00:27:19] Speaker 05:
The only other area I'd like to touch on is shifting over to the sample rate calculation.

[00:27:26] Speaker 05:
There's been much attention paid to Albemarle.

[00:27:30] Speaker 05:
We support the position that

[00:27:33] Speaker 05:
Commerce is not required as a matter of the statute to apply the separate rate calculation methodology and administrative reviews.

[00:27:42] Speaker 05:
It chooses to do so as a matter of its discretion.

[00:27:47] Speaker 05:
I think it's important, as the court examines this issue, to sort of examine footnote seven in albemarle in a little bit more detail.

[00:27:56] Speaker 05:
That footnote appears to be central to the position advanced that the statute contemplates, short it requires, certainly contemplates, that that methodology will be used in administrative reviews.

[00:28:10] Speaker 05:
If you look at that, in fact, the comments, the first part, it says,

[00:28:15] Speaker 05:
The section of the SAA from which the quoted excerpt above was taken refers to the calculation of dumping margins, quote, for all producers and exporters of merchandise who are subject to an anti-dumping investigation or for whom an administrative review is requested.

[00:28:29] Speaker 05:
That's set in page 4200.

[00:28:31] Speaker 05:
In fact, that quoted language, it omits a phrase, the quoted language actually says,

[00:28:37] Speaker 05:
Under existing practice, Commerce attempts to calculate individual dumping margins for all producers and exporters of merchandise who are subject to an anti-dumping investigation or for whom a review is requested.

[00:28:46] Speaker 05:
This is in Section D, Sampling All Others Rate and Voluntary Respondents.

[00:28:50] Speaker 05:
The final sentence of that section says, as negotiated,

[00:28:54] Speaker 05:
Articles 6.10 and 9.4 of the Anti-Domestic Agreement largely reflect existing U.S.

[00:28:59] Speaker 05:
law and practice.

[00:29:00] Speaker 05:
Nevertheless, certain statutory amendments are necessary to conform the statute to the amendment.

[00:29:05] Speaker 05:
So I think it's maybe not as accurate as possible to lift a section which is referring to existing practice and claim that without recognizing that Congress then made changes.

[00:29:17] Speaker 05:
In the next paragraph, the essay states that the provisions governing the determination of individual dumping margins when there are large numbers of exporters and producers applied to reviews as well as investigations.

[00:29:32] Speaker 05:
It's critical here to note that the reference is to Article 11.4 of the Anti-Dumping Agreement.

[00:29:38] Speaker 05:
Article 11.4 talks about sunset reviews, which were introduced as part of that agreement.

[00:29:43] Speaker 05:
It is not a reference to periodic reviews.

[00:29:45] Speaker 05:
And then there's a quote which is saying, the provisions of Article 6 regarding evidence and procedure shall apply to any review carried out under this article.

[00:29:55] Speaker 05:
And it's referring to Article 6.10.

[00:29:59] Speaker 05:
Article 6 only deals with investigations.

[00:30:02] Speaker 05:
It doesn't deal with periodic reviews.

[00:30:04] Speaker 05:
Article 6 refers to investigations 19 times and doesn't refer to reviews or a more general proceeding at all.

[00:30:15] Speaker 05:
You know, I think that if you look at these different pieces, you realize that the position that the statute requires that methodology only in investigations is entirely consistent with the SAA and entirely consistent with the

[00:30:30] Speaker 05:
anti-dumping agreement.

[00:30:31] Speaker 05:
In fact, the anti-dumping agreement doesn't deal in very much detail at all with periodic reviews because different signatories have different approaches.

[00:30:38] Speaker 05:
We have a retrospective approach, other countries have a perspective basis for collective duties.

[00:30:42] Speaker 04:
Can you give me a rational reason why there should be a different process that applies in investigations as opposed to administrative reviews?

[00:30:51] Speaker 05:
You know, I've certainly thought about that and recognizing that there's no statement of congressional intent.

[00:30:58] Speaker 05:
My

[00:30:59] Speaker 05:
my firm belief from years of practice is that it reflects a balance.

[00:31:05] Speaker 05:
It also recognizes the difference, I hate to use this word, but the different ecosystem in which an investigation is conducted versus periodic reviews are conducted.

[00:31:16] Speaker 05:
An investigation is not setting assessment rates.

[00:31:19] Speaker 05:
It's the process by which the agency determines whether to implement trade remedy relief at all.

[00:31:27] Speaker 05:
versus reviews where that relief has been introduced and then the parties are in the process of determining the actual amount of dumping or subsidization to set assessment rates and going forward to devise a cash deposit.

[00:31:43] Speaker 05:
The rationale that I believe makes the most sense here is that Congress is trying to strike a balance.

[00:31:49] Speaker 05:
On the one hand, excluding zero and de minimis rates would

[00:31:54] Speaker 05:
arguably lean toward having higher rates in an investigation.

[00:31:58] Speaker 05:
It might lean more toward imposing relief, because you're eliminating the effect of the zero rates.

[00:32:06] Speaker 05:
On the other hand, excluding rates based entirely on AFA has a tendency to avoid calculating margins that are

[00:32:13] Speaker 03:
I feel like maybe you're missing the question, which the question is why would there be a different methodology for the initial investigation versus the yearly reviews and maybe it has to do with giving commerce flexibility, maybe it has to do with

[00:32:30] Speaker 03:
You know, gamesmanship.

[00:32:31] Speaker 03:
I think you're missing it.

[00:32:33] Speaker 05:
I'm sorry.

[00:32:34] Speaker 05:
I think you're right.

[00:32:34] Speaker 05:
I was missing it.

[00:32:35] Speaker 05:
My apologies.

[00:32:36] Speaker 05:
And I think you put your finger on it.

[00:32:37] Speaker 05:
I mean, the agency has to have discretion to react to and respond to facts on the ground, what's in front of it, which is exactly what you see with the sampling methodology that was implemented through the Federal Register of Notice and exactly what you see on the facts of this case.

[00:32:55] Speaker 05:
Years of apparent manipulation

[00:32:57] Speaker 05:
of the all others rate calculation methodology to artificially undermine the rates that were assigned to the separate companies.

[00:33:09] Speaker 05:
Having said that, it doesn't matter why there's a difference in the rates that Commerce has to find to resort to sampling.

[00:33:13] Speaker 05:
The notice just says, among other factors, you have to have a difference between the rates assigned to the largest exporters and the rate assigned to the others.

[00:33:21] Speaker 05:
That has been clearly established on the record here, and we think Commerce's

[00:33:25] Speaker 05:
discretion allows it to take the calculation methodology that it did.

[00:33:30] Speaker 05:
In fact, if you were to start eliminating rates based on all AFA or even zeros within the context of sampling and calculating picking respondents based on the different strata, you would undermine the whole idea of trying to get a representative margin in this context.

[00:33:52] Speaker 04:
Thank you.

[00:33:52] Speaker 04:
OK, thank you.

[00:33:55] Speaker 04:
Miss Powell and Mr.. Brophy exhausted all of their time.

[00:33:58] Speaker 04:
I'll restore one minute of the bottle for each of them

[00:34:04] Speaker 01:
May it please the court?

[00:34:06] Speaker 01:
Thank you, Your Honor.

[00:34:08] Speaker 01:
First, there's nothing in the record that suggests that Ling Yu was scrambling to come up with an explanation.

[00:34:13] Speaker 01:
The questions were simply asked and answered.

[00:34:17] Speaker 01:
Second, the application of adverse emphasis statute explicitly states that an interested party, that adverse emphasis can be applied when an interested party has failed to cooperate to the best of its ability

[00:34:29] Speaker 01:
and complying with a request for information.

[00:34:33] Speaker 01:
Commerce has made no finding whatsoever that Walude or Lingue failed to comply with a request for information.

[00:34:40] Speaker 01:
Therefore, it was unreasonable for Commerce to reach this decision and conclusion of non-cooperation without articulating a basis for it.

[00:34:48] Speaker 01:
And that concludes my presentation.

[00:34:53] Speaker 01:
Thank you.

[00:34:54] Speaker 01:
Thank you.

[00:34:55] Speaker 01:
Mr. Brophy?

[00:34:57] Speaker 06:
Thank you.

[00:34:58] Speaker 06:
Just a couple of points.

[00:34:59] Speaker 06:
We've talked a little bit here about why commerce can do something different in administrative reviews than it does in investigations.

[00:35:05] Speaker 06:
But that is something commerce needs to explain in its decision, which is not something they did here.

[00:35:10] Speaker 06:
They also need to explain why they can do something different in the case of sampling than they do when they use the largest respondents as the mandatory.

[00:35:23] Speaker 06:
And they haven't done that sufficiently here.

[00:35:25] Speaker 06:
So at the very least, it should be remanded for further explanation.

[00:35:29] Speaker 06:
With regard to my other, including zero rates, I want to just clarify that my answer is based on this court's and the Court of National Trade's decisions in various cases where the commerce only had zero rates and AFA rates.

[00:35:44] Speaker 06:
And in those cases,

[00:35:46] Speaker 06:
The courts have held that they can include the zero rates, but they shouldn't include the AFA rates.

[00:35:52] Speaker 06:
So I do think there's a difference.

[00:35:53] Speaker 06:
Thank you.

[00:35:54] Speaker 04:
Thank you.

[00:35:55] Speaker 04:
I thank all four counsels.

[00:35:56] Speaker 04:
This case is taken under submission.