[00:00:00] Speaker 03:
Steel and Wire versus United States.

[00:00:02] Speaker 03:
Mr. House, please proceed.

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

[00:00:08] Speaker 01:
Good morning.

[00:00:09] Speaker 01:
This case involves an anti-dumping duty order issued nearly a decade ago that was premised entirely on a foreign government subsidized financial statement, which unlawfully distorted

[00:00:22] Speaker 01:
normal value.

[00:00:23] Speaker 01:
The court has heard this case once before in that earlier decision.

[00:00:27] Speaker 03:
OK, so your case comes down to a couple of things.

[00:00:32] Speaker 03:
And can you summarize for me what you think the key flaws are in what Commerce did below?

[00:00:38] Speaker 03:
I don't really need you to say what we did in the last decision.

[00:00:41] Speaker 03:
What I mean by it is one of them has to do with subsidies, right?

[00:00:44] Speaker 03:
Why don't you start with that if you don't mind?

[00:00:47] Speaker 03:
The error that you perceive in commerce's failure to take into account that the two things that it did rely on both potentially had subsidy problems as well and they didn't explain why that it's okay to rely on them when they excluded other data because of subsidy problems.

[00:01:07] Speaker 03:
Is that a fair assessment?

[00:01:08] Speaker 01:
Well, Your Honor,

[00:01:10] Speaker 01:
Generally speaking, the record contains 11 financial statements.

[00:01:14] Speaker 01:
The Commerce Department originally threw out 10 of them and relied on one, a company that is subsidized, to an unknown degree.

[00:01:23] Speaker 01:
In the court's high tech was the name of the company.

[00:01:27] Speaker 01:
When this case came before the court the first time, your honors decided in your decision that Commerce's reliance on that high tech statement, which was indisputably subsidized,

[00:01:39] Speaker 01:
was contrary to the agency's duty of accuracy and fairness.

[00:01:44] Speaker 01:
More specifically, the error that this court remanded the case on was Commerce's failure to comparatively analyze, to gauge the effect of that subsidy on the high-tech statement, and then to comparatively analyze that deficiency.

[00:02:00] Speaker 01:
against the comparative deficiencies of the other 10 statements on the record.

[00:02:04] Speaker 03:
But that's last time.

[00:02:05] Speaker 03:
And this time, is that the same error?

[00:02:07] Speaker 03:
Is your error that Commerce absolutely failed to do the requisite subsidy analysis here?

[00:02:16] Speaker 03:
They just didn't do it.

[00:02:18] Speaker 03:
It's almost like a chennery problem, right?

[00:02:20] Speaker 03:
We can't review what they didn't do.

[00:02:22] Speaker 03:
Is that what it is?

[00:02:23] Speaker 01:
Yes, Your Honor.

[00:02:24] Speaker 01:
They failed to do so.

[00:02:25] Speaker 01:
They explicitly refused to analyze the nature and degree of the subsidies of the two.

[00:02:32] Speaker 03:
Because the problem you have is the degree is infinitesimal.

[00:02:35] Speaker 03:
I mean, at least the record evidence would suggest it's really small and is unlikely to have any significant, it seems to me, impact on

[00:02:43] Speaker 03:
the ultimate question they're deciding.

[00:02:46] Speaker 03:
But if your issue is a failure to do the analysis, I think you might be right, but I don't know.

[00:02:53] Speaker 03:
I don't love vacating and remanding for busy work when the outcome is not going to be favorable for your client.

[00:03:01] Speaker 03:
It just causes you more work, costs them more money.

[00:03:04] Speaker 03:
So tell me what, I mean, if you tell me, well, it doesn't matter if it's infinitesimal.

[00:03:09] Speaker 03:
It doesn't matter if it comes out the same way.

[00:03:10] Speaker 03:
They have to do the analysis.

[00:03:11] Speaker 03:
I think you might be right.

[00:03:14] Speaker 03:
Go ahead, tell me what your thoughts are on that.

[00:03:16] Speaker 01:
Yes, Your Honor.

[00:03:17] Speaker 01:
The agency failed to analyze that subsidy.

[00:03:24] Speaker 01:
And while there's a figure on the record about a subsidy reflected in that financial statement of Sundrum, the other company.

[00:03:32] Speaker 02:
Is that confidential, by the way, or is it not confidential?

[00:03:35] Speaker 01:
I'm sorry, Your Honor.

[00:03:35] Speaker 01:
Is that confidential or not?

[00:03:37] Speaker 01:
It's not.

[00:03:38] Speaker 02:
OK.

[00:03:39] Speaker 02:
So it is like less than 2 100ths of a percent.

[00:03:43] Speaker 02:
of the revenues, right?

[00:03:45] Speaker 02:
Your Honor, there are a couple of problems.

[00:03:47] Speaker 02:
How does that by itself pass the harmless error?

[00:03:52] Speaker 01:
Well, Your Honor, the Commerce Department did not engage in that analysis.

[00:03:56] Speaker 01:
They never referred to that.

[00:03:57] Speaker 02:
Commerce did not mention, did not say, this is so small, we're not going to worry about it.

[00:04:02] Speaker 02:
And even aside from that, it didn't redo the comparative analysis, not to high tech, but between Suntrum and to pick out one, Al Jazeera.

[00:04:11] Speaker 02:
Well, as we pointed out... And I'm just going to consistently put LSI aside.

[00:04:16] Speaker 02:
I realize you would love LSI, but I'm going to put that aside.

[00:04:20] Speaker 01:
Thank you, Your Honor.

[00:04:21] Speaker 01:
The situation we face today is far worse than what we faced with Hitech, because Sundrum, the company that they've now selected,

[00:04:29] Speaker 01:
is one that they've repeatedly determined has no comparable products to Oman Fastener's steel nails, or even screws.

[00:04:37] Speaker 02:
Did Commerce say anything about why the difference between Sundstrom and Oman product is of a different character than the difference between Al Jazeera and Oman products?

[00:04:54] Speaker 01:
Yes, Your Honor.

[00:04:55] Speaker 01:
The record shows that Commerce acknowledged that Sundstrom is an auto parts

[00:04:59] Speaker 01:
manufacturer, and there's plenty of evidence in the record to support its conclusion that the auto parts made by Sundrum are not comparable to any products that Oman Fasteners produces.

[00:05:11] Speaker 03:
And that is what the commerce... Hold on, I think... I'm not certain maybe that Shron is better than I am about whether that answers his question.

[00:05:18] Speaker 02:
I think his question... Not quite.

[00:05:21] Speaker 03:
Yeah, that's what I thought.

[00:05:22] Speaker 03:
So I guess the question was more along the lines of, did they do an analysis to show

[00:05:28] Speaker 03:
why Sundstrom and Oman comparison is OK, but Al-Ghazar?

[00:05:33] Speaker 03:
I don't know if I'm saying it right.

[00:05:34] Speaker 03:
Am I saying that right?

[00:05:35] Speaker 03:
How do you say it?

[00:05:35] Speaker 02:
It's Al-Jazeera.

[00:05:36] Speaker 01:
It's the television people.

[00:05:41] Speaker 01:
Al-Jazeera is one of the six home market statements on the record.

[00:05:45] Speaker 01:
Not the only one, but one of the six home markets.

[00:05:48] Speaker 02:
So it makes the steel pipes or something?

[00:05:52] Speaker 01:
Correct.

[00:05:53] Speaker 03:
I guess the question I thought that Judge Toronto was asking, which is one that I'm also curious about, is

[00:05:58] Speaker 03:
Did Commerce do the legwork of showing why Sundstrom was okay, but Al-Gazir was not, given that none of them are exactly the same product?

[00:06:12] Speaker 03:
Do you follow what I'm saying?

[00:06:14] Speaker 01:
Yes, Your Honor.

[00:06:15] Speaker 01:
And the answer is no, they did not.

[00:06:17] Speaker 01:
In the original investigation, they threw out Sundrum on the precise basis that they threw out all of the home market statements.

[00:06:24] Speaker 01:
In fact, you can find they lumped in Sundrum

[00:06:27] Speaker 01:
and said, just as with the home market financial statements, it produces no comparable merchandise.

[00:06:32] Speaker 03:
So there may be an answer to why one that isn't the same product but not the other.

[00:06:40] Speaker 03:
But commerce hasn't given it yet.

[00:06:43] Speaker 03:
And we are not, as an appellate court, in a position to render fact findings about comparability in the first instance.

[00:06:50] Speaker 01:
That's correct, Your Honor.

[00:06:53] Speaker 03:
I'm just making sure I'm summarizing accurately what you're arguing to us.

[00:06:58] Speaker 03:
You're not asking us to go that extra step and decide they should have looked at something.

[00:07:04] Speaker 03:
Because how do I know whether steel bar, like these different, I'm not in a position

[00:07:09] Speaker 03:
to make that kind of nuanced fact finding.

[00:07:12] Speaker 03:
And you appreciate that, right?

[00:07:13] Speaker 01:
Yes, we agree, Your Honor.

[00:07:14] Speaker 01:
This court should not be in that position.

[00:07:16] Speaker 01:
It's the agency's duty in the first instance.

[00:07:18] Speaker 01:
And that was reflected in this court's remand.

[00:07:21] Speaker 01:
It instructed the agency to engage in that very kind of comparative analysis of the selected subsidized statement against all the other statements on the record, home market, the other third country statements, and the selected subsidized statements.

[00:07:36] Speaker 01:
We do not have that on this remand.

[00:07:38] Speaker 03:
OK, so I think I understand these two arguments, both your subsidy argument and your comparability argument.

[00:07:44] Speaker 03:
Was there anything else that you needed to address?

[00:07:47] Speaker 01:
Well, Your Honor, we did raise also the issue of the potential for reopening the record.

[00:07:53] Speaker 01:
The Commerce Department refused to do so during this first remand.

[00:07:57] Speaker 03:
Is this what you're talking about because of the partially translated documents?

[00:08:01] Speaker 01:
Your Honor, we think there are many reasons why the record should have been reopened.

[00:08:05] Speaker 03:
I didn't ask that.

[00:08:06] Speaker 03:
I'm just asking you to help me put in context how I understand your briefs.

[00:08:11] Speaker 03:
One of the issues that you argued was that there were partially translated documents in commerce should have reopened the record to let you submit them.

[00:08:19] Speaker 03:
What, fully translated?

[00:08:20] Speaker 03:
Is that right?

[00:08:22] Speaker 01:
Your Honor, our overarching argument is that commerce, as this court stated, should have chosen to reopen the record if it concluded

[00:08:31] Speaker 01:
that it did not have enough information to engage in the kind of comparative analysis that you ordered it to do.

[00:08:38] Speaker 03:
Well, I think it seems to think it did have enough information, because it went ahead and came to a conclusion.

[00:08:44] Speaker 03:
But it seems to have jumped over the step of actually explaining it.

[00:08:49] Speaker 01:
Well, Your Honor, if they had engaged in the kind of analysis that this court instructed them to do, they would have looked into the subsidy of the Sundrom statement.

[00:08:58] Speaker 01:
They had no information on the record as the subsidy of the high-tech statement.

[00:09:02] Speaker 01:
And they would have then done a comparative analysis of those deficiencies, as well as the comparability question.

[00:09:10] Speaker 03:
But let me ask you this.

[00:09:10] Speaker 03:
Suppose that we, I mean, I generally have a very deferential approach to commerce's decision when somebody has

[00:09:18] Speaker 03:
failed to meet their burden of submitting a fully translated document, and then they want to come along later and eradicate or fix that problem.

[00:09:26] Speaker 03:
I'm very sympathetic, and I have to review a decision by commerce in those circumstances under an extremely deferential standard.

[00:09:36] Speaker 03:
Would it be absolutely necessary for them?

[00:09:38] Speaker 03:
Would they be required to?

[00:09:40] Speaker 03:
Why on remand?

[00:09:42] Speaker 03:
If I remand this case because I have a problem with commerce not articulating about subsidies and comparability and all that.

[00:09:50] Speaker 03:
Why do I have to find in your favor on that last question?

[00:09:53] Speaker 01:
I don't see why.

[00:09:54] Speaker 01:
Your Honor, we're not relitigating that issue.

[00:09:56] Speaker 01:
We argued that issue in our original appeal.

[00:09:59] Speaker 01:
The court addressed the question of what the regulations of commerce required of parties with regard to the submission of fully translated financial statements.

[00:10:08] Speaker 01:
That's not what we're here to argue today.

[00:10:10] Speaker 01:
And in fact, in the court's decision the first time around when it was dealing with that issue, as well as the home market statements, it made clear that it was addressing those issues aside

[00:10:19] Speaker 01:
from the question of subsidies.

[00:10:21] Speaker 01:
Subsidies was addressed as an independent and very serious concern by the court.

[00:10:27] Speaker 01:
And we agree with that.

[00:10:28] Speaker 01:
So when this case goes back to commerce, as it should, to conduct the kind of analysis that it should, this is not just about the LSI statement.

[00:10:38] Speaker 01:
It's about all of these statements in the record.

[00:10:40] Speaker 01:
We continue to submit that on a comparative basis, some of the home market statements

[00:10:46] Speaker 01:
In a full analysis, which the agency hasn't done, we submit that it should find that some of the home market statements have fewer deficiencies or are less distortive.

[00:10:57] Speaker 03:
We can't make any of those decisions.

[00:10:59] Speaker 03:
I mean, we vacate Merman.

[00:11:00] Speaker 03:
I mean, the only question is for us to identify errors that clearly we have to tell Commerce to fix.

[00:11:06] Speaker 03:
You've put really well done, put forth two clear ones, which is great.

[00:11:13] Speaker 03:
But the third one that has to do with commerce, what commerce should or shouldn't be willing to consider, especially if it was either file laid, if it was untimely, if it was not fully translated.

[00:11:24] Speaker 01:
You don't have me on that one.

[00:11:29] Speaker 01:
We're not here to relitigate the question of our efforts to submit the fully translated LSI statement in the original investigation.

[00:11:36] Speaker 01:
That's a settled issue from the original decision by this court.

[00:11:40] Speaker 01:
What we are here to argue is that the court

[00:11:43] Speaker 01:
The agency did not engage on this record, given the distortive effect of subsidies on the two financial statements, did not engage in the kind of comparative analysis that you instructed it to do.

[00:11:56] Speaker 01:
And it made matters worse, we would submit, because it abandoned the high-tech statement, which has an unknown amount of subsidies, and selected a statement in which, by the way, produces products that are much more similar to Oman Fasteners steel nails.

[00:12:10] Speaker 01:
and selected an auto parts company that had already held twice in proceedings in this case, produced no comparable merchandise to Oman Fasters.

[00:12:20] Speaker 01:
And how can the agency reach that conclusion on this record without fulfilling its duty of accuracy, as you've ordered it to do, to compare those deficiencies to the home market statements that are on the record?

[00:12:32] Speaker 03:
Do you want to save the time for rebuttal?

[00:12:34] Speaker 03:
You're winding down on the rebuttal.

[00:12:36] Speaker 01:
Yes.

[00:12:36] Speaker 03:
OK, let's do that.

[00:12:36] Speaker 03:
Let's hear from the government.

[00:12:38] Speaker 03:
Thank you, Your Honor.

[00:12:38] Speaker 03:
Is the government up first?

[00:12:39] Speaker 03:
Who's up first?

[00:12:41] Speaker 03:
Yes.

[00:12:42] Speaker 04:
Yes, Your Honor.

[00:12:44] Speaker 04:
Thank you for the United States.

[00:12:47] Speaker 04:
May it please the court?

[00:12:49] Speaker 04:
I'm just going to jump straight to subsidies.

[00:12:52] Speaker 04:
And prior to doing so, however, I would like the court to sustain the trial of commerce's remand determination here.

[00:13:02] Speaker 04:
With respect to the subsidies, it is not a fair statement to say that Commerce did not look into the subsidies.

[00:13:11] Speaker 04:
Two of the 11 statements that were on the record, those of HITECH and those of Sundrums, both contained evidence of subsidies.

[00:13:19] Speaker 04:
These are third party companies.

[00:13:22] Speaker 04:
These are not the reviewed company.

[00:13:25] Speaker 04:
They are not an interested party in this investigation.

[00:13:29] Speaker 04:
And I say that because it's important.

[00:13:33] Speaker 04:
These records were put on the record and before commerce by the interested parties, Oman and Mid-Continent, not by commerce.

[00:13:43] Speaker 04:
Commerce is bound to look at the record and make a determination on the record that the parties put before it.

[00:13:52] Speaker 04:
It does not do a verification of the information that are in the financial statements that are put on the record by the interested parties.

[00:14:00] Speaker 04:
All that it can do is make a determination based on the information that is contained in those records.

[00:14:07] Speaker 04:
So what did Commerce do upon remand here?

[00:14:11] Speaker 04:
Commerce engaged seriously with looking at the records of high tech and syndrome that contained evidence of subsidies.

[00:14:20] Speaker 04:
Both of them contained evidence of potential subsidies.

[00:14:24] Speaker 04:
Now, if you're just analyzing those two companies,

[00:14:29] Speaker 04:
It's a wash, because there's really not more information in the financial statements themselves for Commerce to go beyond that.

[00:14:39] Speaker 04:
Now, Your Honors asked questions regarding comparative analysis.

[00:14:45] Speaker 04:
Well, Commerce did that too on remand here.

[00:14:48] Speaker 04:
The trial court insisted that Commerce consider.

[00:14:52] Speaker 03:
Can you show me where Commerce addressed the subsidies issue?

[00:14:56] Speaker 04:
Appendix.

[00:14:58] Speaker 04:
Oh, I'm sorry, the subsidies issue?

[00:15:00] Speaker 04:
Yes, Your Honor.

[00:15:07] Speaker 03:
I think A30 to 31 is the closest I see.

[00:15:10] Speaker 03:
Do you want to look there?

[00:15:14] Speaker 02:
And Bear Commerce says both Phytek and Sundrum have subsidies.

[00:15:18] Speaker 02:
And that's pretty much all it says.

[00:15:20] Speaker 02:
And that point is not, I think, really in dispute.

[00:15:27] Speaker 02:
I thought that Mr. House's argument is that at least once there's an acknowledgment of subsidies in Sundrum,

[00:15:38] Speaker 02:
Commerce is obliged to say why it would pick Sondrum over the remaining rejected, what, nine or 10.

[00:15:47] Speaker 04:
Yes, Your Honor.

[00:15:48] Speaker 04:
And that.

[00:15:48] Speaker 02:
But it didn't do that.

[00:15:50] Speaker 04:
Actually, it did do that.

[00:15:52] Speaker 04:
OK.

[00:15:52] Speaker 04:
And it did do that on Appendix page 40.

[00:15:57] Speaker 04:
And there, Your Honor, Commerce stated that it found that Sondrum's statements, and I'm summarizing here, Sondrum's.

[00:16:04] Speaker 04:
Hold on.

[00:16:05] Speaker 03:
Don't summarize.

[00:16:06] Speaker 04:
Tell me where they did it.

[00:16:07] Speaker 04:
OK.

[00:16:07] Speaker 04:
Yes, Your Honor.

[00:16:30] Speaker 02:
Is it at the very top that you're?

[00:16:32] Speaker 04:
That's where it discusses that they acknowledge both HITECH and Sundrum received subsidies, Your Honor.

[00:16:39] Speaker 04:
And then at the paragraph beginning furthermore, which is the fifth line from the top, it discusses the second or the next sentence.

[00:16:49] Speaker 04:
Therefore, based on record evidence, we find that Sundrum's financial statements are the best option on the record for calculating CP profit.

[00:16:59] Speaker 04:
and independent selling expenses, because they were spent.

[00:17:04] Speaker 02:
Well, I thought, actually, you were going to read the second sentence, which feels like it gets closer to what you need.

[00:17:11] Speaker 02:
While Hitech and Sundrum's profit may be distorted by subsidies, their respective profits are still based on production and sale of comparable merchandise, unlike the other financial statements on the record.

[00:17:25] Speaker 04:
This is true.

[00:17:26] Speaker 04:
I apologize, Your Honor.

[00:17:28] Speaker 04:
I was actually responding to the question about comparing those records, subsidized records, with the other financial states on the record as well.

[00:17:38] Speaker 02:
Does that sentence make that comparison?

[00:17:40] Speaker 04:
Yes, it does.

[00:17:40] Speaker 02:
Put it mildly in rather short form.

[00:17:42] Speaker 02:
Yes, Your Honor.

[00:17:45] Speaker 04:
Yes, it does.

[00:17:46] Speaker 04:
And so to pull this all together, Commerce, its goal is to,

[00:17:55] Speaker 04:
arrive at constructed value profit based on a comparison of like or comparable merchandise.

[00:18:06] Speaker 02:
Right, so I just want to push ahead to what I think is really in dispute.

[00:18:11] Speaker 02:
One way of putting the argument is that that sentence is kind of all there is, the one that we were just talking about, and it's not enough because

[00:18:24] Speaker 02:
At least previously, the commerce had said Sundrum's products were really not terribly comparable.

[00:18:33] Speaker 02:
Different purchasers, automotive manufacturers were buying them.

[00:18:37] Speaker 02:
They were kind of high-end fasteners, not penny-steel nails or something.

[00:18:43] Speaker 02:
And an explanation is needed for why that previous determination about non-comparability

[00:18:52] Speaker 02:
is now being reversed, in effect.

[00:18:58] Speaker 02:
And it's not just a standalone reversal.

[00:19:00] Speaker 02:
It's a comparison to, I'm just going to keep using Al Jazeera, which seems to be the feature, the non-comparability determination about Al Jazeera.

[00:19:09] Speaker 02:
Why is that non-comparability worse than the one it had previously found for Sandra?

[00:19:18] Speaker 02:
That's my understanding of the argument.

[00:19:20] Speaker 04:
Absolutely, Your Honor.

[00:19:22] Speaker 04:
Your question anticipated exactly where I was going here.

[00:19:26] Speaker 04:
Commerce prefers to calculate a constructed value profit based on comparable merchandise.

[00:19:35] Speaker 04:
This is a fact.

[00:19:36] Speaker 04:
Al Jazeera does not make comparable merchandise.

[00:19:40] Speaker 04:
It's not steel nails.

[00:19:42] Speaker 04:
It's not the general category of goods that steel nails falls within, which is fasteners.

[00:19:49] Speaker 03:
But the only problem is I think that this goes to Judge Toronto's earlier question to your opponent, which was related to if you previously found Sundrom's products are not reasonably comparable, then how is it an answer to say Al Jazeer's products are not reasonably comparable?

[00:20:12] Speaker 04:
The answer is that steel bars

[00:20:15] Speaker 04:
and tubes and hollows fall within a completely disparate category of goods and steel nails.

[00:20:21] Speaker 03:
So where did Commerce say that?

[00:20:22] Speaker 03:
I understand your argument today, and I appreciate that, that what you're arguing to me today is, well, even though both of them are not comparable, one is much worse in terms of comparability than the other, like degrees of not comparable, where did Commerce do that detailed assessment?

[00:20:37] Speaker 03:
Because I think that's what Mr. House is complaining about is,

[00:20:41] Speaker 03:
that there isn't that analysis, in this opinion, for us to look at.

[00:20:46] Speaker 04:
On page 28 of the appendix at the bottom, where it says in the instant case, there are 11 financial statement on the record.

[00:20:58] Speaker 04:
Commerce goes on to discuss the six Omani companies that do not produce steel nails or any type of merchandise comparable enough to steel nails.

[00:21:09] Speaker 04:
to satisfy the statutory preferences.

[00:21:12] Speaker 04:
And the federal court has upheld our decision to rely instead on the third country data on the record, which better reflect the profit experience of the mandatory respondent.

[00:21:24] Speaker 04:
Now, with that said, Your Honor, previously, Commerce made a determination that nine financial statements on the record were either

[00:21:34] Speaker 04:
of goods that are completely dissimilar.

[00:21:37] Speaker 04:
And what that means is that they're not sold in the same trade.

[00:21:41] Speaker 04:
They do not involve similar types of operations for manufacturing the goods.

[00:21:48] Speaker 04:
They do not have the same customer base.

[00:21:50] Speaker 03:
I don't see any of that in this opinion.

[00:21:53] Speaker 03:
Where is that in this opinion?

[00:21:54] Speaker 03:
Those are great arguments.

[00:21:57] Speaker 03:
And if commerce had said all of that, we wouldn't be here today.

[00:22:00] Speaker 04:
Actually, commerce, it's in the record, but not in this determination you're on.

[00:22:05] Speaker 03:
And did they say it with regard to the direct comparison between, say, Al Jazeer and what's the other one?

[00:22:18] Speaker 03:
Does Toronto help me?

[00:22:19] Speaker 03:
Sundrum?

[00:22:19] Speaker 04:
Sundrum.

[00:22:20] Speaker 04:
Yeah.

[00:22:22] Speaker 04:
On page 40, I believe, it didn't directly refer to Al Jazeera, but it referred to

[00:22:30] Speaker 04:
the profit from production and sale of comparable merchandise, unlike the six Omani financial statement.

[00:22:40] Speaker 04:
They contain the necessary information to confirm the company's data is reliable, unlike the three partially translated financial statements.

[00:22:49] Speaker 04:
And they are contemporaneous with the record, unlike high-tech.

[00:22:56] Speaker 04:
I want to clarify a question or an answer to a question.

[00:23:00] Speaker 04:
I do not know that I answered it quite frankly.

[00:23:05] Speaker 04:
Previously, Commerce had declined to use the records of nine financial statements on the record, six of which were from Oman, three of which were partially translated financial statements, Your Honor.

[00:23:22] Speaker 04:
It had reduced

[00:23:23] Speaker 04:
the comparative analysis to two companies, those two companies being Hitex and Sundrums.

[00:23:30] Speaker 04:
Therefore, the analysis that was before this court in Midcontinent 3 really pertained to just those two companies.

[00:23:38] Speaker 04:
And Commerce had not engaged in any substantive analysis of subsidies.

[00:23:45] Speaker 04:
There was no reason for it to then discuss also

[00:23:52] Speaker 04:
the other companies that the court had, quite frankly, affirmed its decision on.

[00:24:00] Speaker 02:
So I think you're actually getting at the heart of the process question here.

[00:24:11] Speaker 02:
You want to essentially say certain issues the book was closed on and commerce didn't need to reconsider, even though, and I think the other side wants to say, whether the book was closed on them

[00:24:28] Speaker 02:
depends on what effect a error in what is ultimately a global comparative assessment has on the things that otherwise are closed.

[00:24:43] Speaker 02:
And it seems to me as, I don't know,

[00:24:47] Speaker 02:
I'm not quite sure what to make of the idea that when the only thing that in the end matters is whether the global assessment has reasonably resulted in the choice of axi or sundrum.

[00:25:03] Speaker 02:
And that requires a comparison between all the other choices.

[00:25:07] Speaker 02:
And just because all the other nine had been excluded when no subsidy problem was seen,

[00:25:17] Speaker 02:
with high tech and syndrome doesn't mean that they were properly excluded once you see that there's a subsidy problem.

[00:25:24] Speaker 04:
I understand, Your Honor.

[00:25:26] Speaker 04:
And the answer to this question is that commerce actually did review all of the 11 statements again.

[00:25:35] Speaker 04:
Commerce actually made a similar determination to the determinations that it previously made with respect to nine of them.

[00:25:44] Speaker 04:
There is a reason why the nine other financial statements were not usable for commerce's purposes.

[00:25:54] Speaker 04:
The reason is that commerce, for approximately 20 years, has been using a standard that basically looks at the merchandise itself in the first instance.

[00:26:08] Speaker 04:
So when you're doing an analysis of financial statements.

[00:26:14] Speaker 02:
So when you go back to the earlier commerce analysis, and I guess I'm thinking particularly at What's That Appendix, page 3265 and following, it's the May 13, 2015, I don't know what these things are called, Memorandum, Issues and Decision Memorandum.

[00:26:33] Speaker 02:
There's some discussion, at least at 3279,

[00:26:37] Speaker 02:
the equipment used for, I guess, these other six Omani companies making a different product.

[00:26:46] Speaker 02:
Is there anything in there or elsewhere where commerce says, it's true that for Sundrum,

[00:26:53] Speaker 02:
The fasteners are not exactly steel nails.

[00:26:57] Speaker 02:
But they are in kind of the next level up category of fasteners.

[00:27:02] Speaker 02:
And the ones from the six Omani companies are not.

[00:27:06] Speaker 02:
And that makes a big difference.

[00:27:11] Speaker 04:
I thought they said that in this remand determination, Your Honor.

[00:27:17] Speaker 03:
Which remand determination?

[00:27:19] Speaker 04:
The one that is before the court right now, Your Honor.

[00:27:23] Speaker 03:
Well, I would love to see that, because I think that's the heart of what Mr. House says is the problem, that they didn't make it.

[00:27:31] Speaker 04:
On appendix page 26, Commerce explained that high-tech financial statements were superior to those of the Omani producers on the record, because none of the six Omani companies on the record produced merchandise comparable to steel nails

[00:27:51] Speaker 04:
or in the same general category as steel name.

[00:27:54] Speaker 02:
That's the top of page 27, right?

[00:27:56] Speaker 04:
Yes.

[00:27:57] Speaker 02:
That's where it continues to, Your Honor.

[00:28:00] Speaker 02:
So a version of that argument is, well, there at least is a reason why the kind of the non-identity of Al Jazeera and Oman fasteners is worse than the non-identity of Sundrum versus

[00:28:21] Speaker 04:
I'm sorry, you're on the right... Yeah, I'm sorry.

[00:28:27] Speaker 03:
Never mind.

[00:28:28] Speaker 03:
I think I'll try and re-classify what you just said because I think it's important and I think it's actually a friendly question for you.

[00:28:34] Speaker 03:
Yeah, it was.

[00:28:35] Speaker 03:
Which is here you show why it was okay to reject from a technical standpoint certain of the kinds of imports because they were more dissimilar than the ones that you consider.

[00:28:51] Speaker 04:
Correct, Your Honor.

[00:28:53] Speaker 04:
And there, the balance of that sentence actually states that comparable merchandise comprised a greater portion of high-tech sales revenue than sundrums.

[00:29:07] Speaker 04:
Sundrum actually does make screws.

[00:29:10] Speaker 04:
That's not helpful.

[00:29:11] Speaker 04:
But it does actually make screws, whereas the six Omani companies, they don't make screws.

[00:29:20] Speaker 04:
Commerce made a determination that... I'm sorry, but Sundrum doesn't either.

[00:29:25] Speaker 04:
Sundrum makes screws.

[00:29:27] Speaker 02:
It does make screws.

[00:29:28] Speaker 04:
Yes, it does.

[00:29:30] Speaker 04:
Sundrum makes auto parts and screws.

[00:29:33] Speaker 04:
And Commerce, when it made its determination here, it accounted for the fact that Sundrum made other products that were dissimilar.

[00:29:45] Speaker 04:
So it focused its attention on the products that are

[00:29:49] Speaker 04:
comparable and at least fall within the same class or kind.

[00:29:54] Speaker 02:
This is shifting gears a little bit.

[00:29:57] Speaker 02:
Why did commerce not say that the amount of the subsidy on the record for sundrum was infinitesimally small?

[00:30:08] Speaker 02:
It could not possibly have affected the profit?

[00:30:14] Speaker 04:
The short answer is I don't know.

[00:30:15] Speaker 04:
However,

[00:30:18] Speaker 04:
based upon what I do know.

[00:30:21] Speaker 04:
They don't go beyond what's actually stated in the financial statements themselves.

[00:30:28] Speaker 04:
All they could do is state what the figure was.

[00:30:32] Speaker 04:
And that is what they did.

[00:30:33] Speaker 02:
Well, I thought the financial statement itself reveals, here's the subsidy.

[00:30:37] Speaker 02:
It's like $3 or something, and making that up.

[00:30:41] Speaker 02:
And the revenue is $50,000 or something.

[00:30:45] Speaker 02:
It can't possibly change anything.

[00:30:48] Speaker 04:
Commerce had previously, I believe in another case, found that counter-available.

[00:30:59] Speaker 04:
And I believe they state that in a footnote somewhere in the remand determination, Your Honor.

[00:31:05] Speaker 04:
And accepting that they had previously done that, they left it at that.

[00:31:12] Speaker 04:
I believe my time is up.

[00:31:15] Speaker 04:
Yeah, it definitely is.

[00:31:17] Speaker 04:
Thank you, Your Honors.

[00:31:18] Speaker 04:
I apologize for exceeding my time.

[00:31:31] Speaker 03:
Mr. Gordon, we just heard from the government for 18 and a half minutes.

[00:31:35] Speaker 03:
So please, if you have something that is completely different that you feel is important, please proceed.

[00:31:42] Speaker 03:
But we're not going to entertain a

[00:31:45] Speaker 00:
No, I have no interest in that either.

[00:31:49] Speaker 00:
I would just offer one or two very brief points.

[00:31:52] Speaker 00:
One factor I think should be brought out when the comparison between high tech and sunroom is made

[00:31:59] Speaker 00:
is to keep in mind the difference in time periods covered by those financial statements.

[00:32:04] Speaker 00:
The Sundrum statement covers precisely the same period of time and reflects accordingly same economic conditions of the period of investigation, whereas the High Tech financial statement... What about the Al Jazeera statement?

[00:32:21] Speaker 00:
I don't recall their contemporaneity.

[00:32:24] Speaker 00:
I don't think commerce got to that point because

[00:32:26] Speaker 00:
of the such fundamental difference in the products produced.

[00:32:30] Speaker 00:
And just to make a point that's on the record, keep in mind, those six companies that were rejected, they weren't just producing steel bars and rounds, corrugated box containers.

[00:32:40] Speaker 00:
There was a company that provides large-scale construction services like a Bechtel.

[00:32:44] Speaker 00:
So I mean, they're very, very radically different.

[00:32:46] Speaker 00:
And their financial statements don't have any sort of comparison to the kinds

[00:32:53] Speaker 00:
processes and markets and customer base that are reflected in a producer of fasteners.

[00:32:58] Speaker 00:
And to the point about Sundem's production, it does produce auto parts, but it also is a significant producer of high tensile fasteners, and they're produced with the same methods, materials sold for same uses, fastening surfaces together.

[00:33:13] Speaker 03:
I happen to know the percentage of Sundrum's sales that are directed to auto fasteners.

[00:33:19] Speaker 03:
And I'd like to ask you, but is that confidential information before I ask that question?

[00:33:24] Speaker 03:
I don't want to.

[00:33:24] Speaker 00:
No, no.

[00:33:25] Speaker 03:
OK, so my understanding is 36% of their sales are directed to fasteners.

[00:33:30] Speaker 03:
And that's what you're saying is more comparable, right?

[00:33:32] Speaker 03:
Is that?

[00:33:34] Speaker 00:
Yeah, that's a significant percentage of the company's.

[00:33:38] Speaker 03:
And that's why I'm wondering how that compares to

[00:33:41] Speaker 03:
the other companies and their, because it's clear Sundrum is in multiple markets, some of which you're arguing is more comparable, some of which is less comparable.

[00:33:52] Speaker 03:
How does that 36% number of their sales compare to other record companies here and does it make it better that commerce used them for some reason or worse?

[00:34:06] Speaker 00:
I'd say it makes it better, because if you look at the six that were rejected in that sort of iterative process, they produce zero, none.

[00:34:15] Speaker 00:
No, they don't produce fasteners at all.

[00:34:17] Speaker 00:
And so Commerce naturally removed them from consideration, consistent with the approach that the court had previously affirmed.

[00:34:25] Speaker 00:
I'm not saying they considered the book closed.

[00:34:27] Speaker 00:
They went back and reviewed all of them anew.

[00:34:29] Speaker 00:
But they used the same approach that the court had previously found to be acceptable.

[00:34:33] Speaker 00:
And so getting to Sundrum with 30

[00:34:36] Speaker 00:
34%, 36% of fasteners.

[00:34:37] Speaker 00:
I mean, that's a material, I mean, that's a substantial part of their business.

[00:34:43] Speaker 00:
And they are then a producer of comparable merchandise, even though they make other dissimilar products as well.

[00:34:51] Speaker 00:
But that's it for me.

[00:34:52] Speaker 03:
Thank you.

[00:34:53] Speaker 03:
Thank you.

[00:35:02] Speaker 03:
Oh, no, I was waiting.

[00:35:04] Speaker 03:
I think she just gave me five minutes.

[00:35:06] Speaker ?:
Sorry.

[00:35:06] Speaker 01:
We heard the government concede that it did not examine subsidies.

[00:35:10] Speaker 01:
It merely acknowledged them.

[00:35:12] Speaker 01:
We also heard it concede that it engaged in a comparison of high tech to Sundrum only.

[00:35:18] Speaker 01:
We believe that was contrary to this court's instructions.

[00:35:22] Speaker 01:
Furthermore, on this question of comparability, the Commerce Department has still failed to explain its complete about face on its finding with regard to Sundrum's products.

[00:35:34] Speaker 01:
The Fair Value investigation, the original investigation, the agency determined that Sunderm's products were not comparable.

[00:35:44] Speaker 01:
You'll find that at 3279 of the appendix.

[00:35:48] Speaker 01:
And they rejected Sunderm along with, and for the same reason as, all of the home market statements.

[00:35:54] Speaker 01:
And again, in the first remand in this proceeding, which you'll find at 3405, the Commerce Department stated again that Sunderm's

[00:36:05] Speaker 01:
that not only is the majority of Sunderm's products not related to fasteners, auto parts, which they conclude are not comparable to Stianos, but importantly, this agency stated, Sunderm's fastening products are not comparable to either screws

[00:36:20] Speaker 01:
or steel nails.

[00:36:21] Speaker 03:
OK, but I guess the question is twofold.

[00:36:24] Speaker 03:
One, the government pointed us to the portion of the opinion where they said, OK, look, they might not be comparable, but they're a lot closer than the other things.

[00:36:34] Speaker 03:
That sentence, I don't remember what page it was in the board's decision, that they're much closer.

[00:36:39] Speaker 03:
That there's not comparable, and then there's really not comparable, and that the sundrum products are at least closer.

[00:36:46] Speaker 01:
Well, Your Honor, we submit that the record does not show the kind of comparison between Sundrum and the Omani Home Market steel producer statements that would allow the agency to reach that conclusion.

[00:36:58] Speaker 01:
And in addition,

[00:36:59] Speaker 01:
the agency did not engage in the comparative analysis of the admittedly subsidized statement syndrome against these other so-called noncomparable statements.

[00:37:11] Speaker 01:
The analysis simply isn't there for this point.

[00:37:14] Speaker 03:
And the other problem I have with what you just said before was you said the majority is not related to fasteners and I think

[00:37:19] Speaker 03:
that Mr. Gordon's point was that, well, 36% of the sundroom sales are fastener-related compared to 0% of the excluded six statements.

[00:37:34] Speaker 03:
So I mean, well, I don't think you would disagree.

[00:37:37] Speaker 03:
It's not the majority.

[00:37:38] Speaker 03:
36% is not 51%.

[00:37:40] Speaker 03:
So I think that's an unremarkable statement.

[00:37:41] Speaker 03:
Why, though, isn't 36% make it more relevant than ones that have 0%?

[00:37:46] Speaker 01:
Your Honor, we come back to the statutory language, which under this third alternative for constructive value of profit puts a priority on home market representativeness.

[00:37:58] Speaker 01:
You'll find this throughout the cases, throughout commerce's decision.

[00:38:02] Speaker 03:
I don't understand how that answers my question.

[00:38:03] Speaker 01:
That is to say, when commerce must depart from

[00:38:06] Speaker 01:
a source of profit that is the very company under investigation, which it had to do in this case, when it selects a source of profit under the option three, which is the any reasonable method subsection of the statute that applies here, you'll find language there that says that, however, when it makes that selection, it must take account of the home market.

[00:38:30] Speaker 01:
That is the

[00:38:31] Speaker 01:
The purpose of selecting a profit rate is to reflect the home market experience of a producer.

[00:38:39] Speaker 01:
These are third country statements we're talking about, both Sundrum and Hitech.

[00:38:43] Speaker 01:
So the agency not only failed to explain the effect of the subsidy and the comparative deficiency of the subsidy to these home market statements, they also failed to weigh the comparative value of having home market profit experience in Oman by these steel producers compared to third country

[00:39:01] Speaker 01:
profit experience of these subsidized statements.

[00:39:06] Speaker 01:
And finally, I would note that the government made the point that the parties made this record.

[00:39:12] Speaker 01:
Well, the record is lacking what the Commerce Department needs to analyze subsidies.

[00:39:20] Speaker 01:
It admitted so and chose not to do so.

[00:39:25] Speaker 01:
The petitioner is the one who

[00:39:26] Speaker 01:
populated this record with those two subsidized statements.

[00:39:30] Speaker 01:
And so, if anything, it's the other side that failed to provide the Commerce Department with the record evidence sufficient to engage in this analysis.

[00:39:42] Speaker 03:
Okay, that seems like a good place to conclude.

[00:39:44] Speaker 03:
I thank all counsel.

[00:39:45] Speaker 03:
This case is taken under submission.