Jiaxing Brother Fastener Co. v. United States

This action is before the court on a motion for judgment on the agency record challenging various aspects of the U.S. Department of Commerce's ("Commerce") final determination in the fourth administrative review of the 2009 antidumping duty ("ADD") order on certain steel threaded rod ("STR") from the People's Republic of China ("PRC"). Certain [STR] from the [PRC]: Final Results of [ADD] Admin. Review; 2012-2013 , 79 Fed. Reg. 71,743 (Dep't Commerce Dec. 3, 2014) (" Final Results ") and accompanying Issues & Decision Mem. for the Final Results of the Fourth Admin. Review of the [ADD] Order on Certain [STR] from the [PRC], A-570-932, (Nov. 21, 2014), ECF No. 23-2 ("Final Decision Memo"); Certain [STR] from the [PRC]: Notice of [ADD] Order , 74 Fed. Reg. 17,154 (Dep't Commerce Apr. 14, 2009). 1

Plaintiffs Jiaxing Brother Fastener Co., Ltd., (a/k/a Jiaxing Brother Standard Part Co., Ltd.), IFI & Morgan Ltd., and RMB Fasteners Ltd., ("Jiaxing," collectively) 2 contend that Commerce's selection of Thailand as the primary surrogate country for the calculation of the normal value of Jiaxing's STR products is both unsupported by substantial evidence and arbitrary and capricious. See Pls.' Rule 56.2 Mem. In Supp. of J. Upon the Agency R. at 2, 7-29, Apr. 29, 2015, ECF No. 27 ("Pls.' Br."). Plaintiffs also challenge the valuation of Jiaxing's steel wire rod factor of production, brokerage and handling ("B & H") costs, and surrogate financial ratios as related to labor, as unsupported by substantial evidence. Id. at 3-4, 31-45 . For the reasons set forth below, Commerce's selection of Thailand as the primary surrogate country is sustained, as is Commerce's valuation of Jiaxing's steel wire rod factor of production and the selection of the World Bank's "Doing Business 2014: Thailand" report to value B & H costs. However, Commerce's determination regarding the calculation of the surrogate financial ratios as related to labor is remanded. Commerce's calculation of B & H costs regarding the 10,000 kilogram weight assigned to 20-foot shipping containers and Commerce's decision not to make adjustments for costs associated with acquiring letters of credit is also remanded.

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012), 3 and 28 U.S.C. § 1581 (c) (2012). Commerce's antidumping determinations must be in accordance with law and supported by substantial evidence. 19 U.S.C. § 1516a(b)(1)(B)(i).

BACKGROUND

On June 3, 2013, Commerce initiated the fourth administrative review covering the subject merchandise entered during the period of review, April 1, 2012, through March 31, 2013. Initiation of Antidumping and Countervailing Duty Admin. Reviews and Request for Revocation in Part , 78 Fed. Reg. 33,052 (Dep't Commerce June 3, 2013). Jiaxing was selected as the single mandatory respondent for this review. Decision Mem. for Prelim. Results of Fourth [ADD] Admin. Review: Certain [STR] from the [PRC] at 2, PD 102, bar code 3202470-01 (May 16, 2014) ("Prelim. Decision Memo").

In the preliminary results, Commerce determined that Colombia, Costa Rica, Indonesia, the Philippines, South Africa, Thailand, and Ukraine were all countries at the PRC's level of economic development. Prelim. Decision Memo at 6-7. Commerce also found that Colombia, Costa Rica, Indonesia, the Philippines, South Africa, Thailand, and Ukraine were all significant producers of comparable merchandise. Final Decision Memo at 4. Commerce then limited consideration to the Philippines, Thailand, and Ukraine, as the record only contained surrogate value data for these countries. Id. at 6 .

On December 3, 2014, Commerce published the Final Results , selecting Thailand as the primary surrogate country. See id. at 5-14 . 4 Commerce ultimately determined that, while both the Ukrainian and Thai data met its selection criteria, Thailand was preferable as a primary surrogate country because it offered both suitable surrogate value data and contemporaneous financial statements. See id. at 11, 13-14 . Commerce then calculated surrogate values for Jiaxing's factors of production using data from Thailand, including generating a surrogate value for Jiaxing's steel wire rod factor of production through a simple average of three Harmonized Tariff Schedule ("HTS") categories within the Thai data. Id. at 17 . Commerce also used Thai data to prepare a surrogate value for labor input directly associated with manufacturing. Final Decision Memo at 19-22. In preparing the surrogate value of labor, Commerce determined it was not necessary to make adjustments to avoid double counting labor costs associated with selling, general, and administrative costs in the calculation of Jiaxing's surrogate financial ratios. Id. Commerce also employed the World Bank's "Doing Business 2014: Thailand" report to generate a surrogate value for Jiaxing's B & H costs. Id. at 23-26 ; Commerce's Surrogate Values for the Prelim. Results at Ex. 15, PD 104-05, bar codes 3202737-01-02 (May 16, 2014) ("Commerce's Prelim. S. V. Memo"). In computing Jiaxing's B & H costs, Commerce did not make a deduction for the cost of acquiring letters of credit. Final Decision Memo at 25-26. Commerce also generated B & H costs on a per-kilogram basis by assigning each shipping container of Jiaxing's STR a weight of 10,000 kilograms. Id. at 26-28 . Jiaxing filed its Complaint on December 10, 2014, and later an amended complaint. Compl., Dec. 10, 2014, ECF No. 10; First Am. Compl., Sept. 21, 2015, ECF No. 41. 5

DISCUSSION

Jiaxing alleges that Commerce's selection of Thailand as the primary surrogate country is unsupported by substantial evidence. Pls.' Br. at 2, 7-29. Jiaxing further argues that it was arbitrary and capricious for Commerce to find that Thailand provided reliable surrogate value data. Id. at 2-3, 7-20 . To the extent that Commerce's selection of Thailand as the primary surrogate country is sustained, Jiaxing also challenges the particular use of Thai data to value the steel wire rod factor of production, B & H costs, and surrogate financial ratios as related to labor, as unsupported by substantial evidence. Id. at 3-4, 31-45 . The court sustains Commerce's selection of Thailand as the primary surrogate country, as well as Commerce's valuation of steel and use of the "Doing Business 2014: Thailand" report to calculate B & H costs. However, Commerce's calculation of surrogate financial ratios as related to labor, its decision not to adjust B & H costs for the costs associated with acquiring letters of credit, and the weight assigned to shipping containers in the calculation of B & H costs are all unsupported by substantial evidence and are remanded for further explanation or reconsideration consistent with this opinion.

I. Primary Surrogate Country Selection

Jiaxing challenges Commerce's selection of Thailand as the primary surrogate country as unsupported by substantial evidence because Thailand did not provide the "best available information" as compared with that available from Ukraine and the Philippines. See Pls.' Br. at 21-31. Jiaxing further argues that it was arbitrary and capricious for Commerce to find that Thailand provided reliable surrogate value data. See id. at 8-20 . Defendant argues that there is substantial evidence supporting Commerce's selection of Thailand as the primary surrogate country and that it was not arbitrary and capricious for Commerce to treat the Thai import data as reliable. See Def.'s Resp. to Pls.' Mot. for J. on the Admin. R. at 7-23, Oct. 9, 2015, ECF No. 45 ("Def.'s Br."). For the following reasons, Commerce's selection of Thailand as the primary surrogate country is sustained.

Dumping occurs when merchandise is imported into the United States and sold at a price lower than its "normal value," resulting in material injury (or the threat of material injury) to the U.S. industry. See 19 U.S.C. §§ 1673 , 1677(34), 1677b(a). The difference between the normal value of the merchandise and the U.S. price is the "dumping margin." See 19 U.S.C. § 1677 (35). When normal value is compared to the U.S. price and dumping is found, antidumping duties equal to the dumping margin are imposed to offset the dumping. See 19 U.S.C. § 1673 ; see generally Dorbest Ltd. v. United States , 604 F.3d 1363 , 1367 (Fed. Cir. 2010).

Where the exporting country has a nonmarket economy, as in this case, Commerce identifies one or more market economy countries to serve as a "surrogate" and then "determine[s] the normal value of the subject merchandise on the basis of the value of the factors of production" in the relevant surrogate country or countries, including "an amount for general expenses and profit plus the cost of containers, coverings, and other expenses." See 19 U.S.C. § 1677b(c)(1), (4). This surrogate value analysis is designed to determine a producer's costs of production as if the producer operated in a hypothetical market economy. See, e.g. , Downhole Pipe & Equipment, L.P. v. United States , 776 F.3d 1369 , 1375 (Fed. Cir. 2015).

Commerce must value the factors of production through "the best available information." 19 U.S.C. § 1677b(c)(1). Commerce has discretion to determine what constitutes the best available information, as this term is not defined by statute. QVD Food Co. v. United States , 658 F.3d 1318 , 1323 (Fed. Cir. 2011). "Commerce generally selects, to the extent practicable, surrogate values that are publicly available, are product-specific, reflect a broad market average, and are contemporaneous with the period of review." Qingdao Sea-Line Trading Co. v. United States , 766 F.3d 1378 , 1386 (Fed. Cir. 2014) ; see also Import Admin., U.S. Dep't Commerce, Non-Market Economy Surrogate Country Selection Process , Policy Bulletin 04.1 (2004), available at http://enforcement.trade.gov/policy/bull04-1.html (last visited May 1, 2019).

Using the best available information, Commerce "shall [value the factors of production] to the extent possible ... in one or more market economy countries that are - (A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4)(A)-(B). The statute does not define "comparable;" nor does it require Commerce to use any particular methodology in determining which countries are sufficiently comparable.

Commerce has a preference to use one primary surrogate country. See 19 C.F.R. § 351.408 (c)(2). When several countries are both at a level of economic development comparable to the nonmarket economy country and significant producers of comparable merchandise, Commerce evaluates the reliability and completeness of the data in the similarly situated surrogate countries and generally selects the one with the best data as the primary surrogate country. 6 Final Decision Memo at 5.

An agency's determination is supported by substantial evidence when there is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Nippon Steel Corp. v. United States , 337 F.3d 1373 , 1379 (Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB , 305 U.S. 197 , 229, 59 S.Ct. 206 , 83 L.Ed. 126 (1938) ). However, the "substantiality of evidence must take into account whatever in the record fairly detracts from its weight." Universal Camera Corp. v. NLRB , 340 U.S. 474 , 488, 71 S.Ct. 456 , 95 L.Ed. 456 (1951). Nevertheless, "the possibility of drawing two inconsistent conclusions from the evidence does not invalidate Commerce's conclusion as long as it remains supported by substantial evidence on the record." Zhaoqing New Zhongya Aluminum Co. v. United States , 36 CIT ----, ----, 887 F.Supp.2d 1301 , 1305 (2012) (citing Universal Camera Corp. , 340 U.S. at 488 , 71 S.Ct. 456 ).

On this record, Commerce's selection of Thailand as the primary surrogate country over Ukraine and the Philippines is supported by substantial evidence because Thailand was the only country for which there was specific steel input data as well as contemporaneous financial statements from producers of comparable merchandise. Commerce looked at the available data for low carbon steel wire rod and round bar ("steel wire rod") - Jiaxing's most significant factor of production - and found surrogate value data from both Thailand and Ukraine to be specific. Final Decision Memo at 7-12. Commerce identified the Philippines, Thailand, and Ukraine as economically comparable to the PRC, significant producers of comparable merchandise, and countries for which the record contained surrogate value data. Id. at 6. Commerce found Thai Global Trade Atlas ("GTA") import data to be specific because it was differentiated by carbon content and could be matched to the steel inputs used by Jiaxing. Id. at 10. Commerce found Ukrainian GTA data was not specific because it contained only broad basket categories. Id. However, Jiaxing also supplemented the record with Ukrainian Metal Expert data which Commerce found specific because it covered a carbon content range that matched Jiaxing's steel input. Id. at 11. Commerce determined GTA data from the Philippines was not specific because it grouped together low carbon and mid carbon steel, the latter of which was not used by Jiaxing. Id. at 10.Commerce also found that Thailand provided multiple contemporaneous financial statements from producers of comparable merchandise. Id. at 13. 7 It found that the financial statements from Ukraine and the Philippines, although from producers of comparable merchandise, were not contemporaneous. Id.

Jiaxing lacks support for its argument that it is inappropriate for Commerce to select Thailand because Thailand "presents by far the most expensive home market" 8 and "no reasonable producer would decide to make Thailand its home market for [STR]." 9 Pls.' Br. at 20 (emphasis omitted). 10 In nonmarket economy proceedings Commerce values a respondent's factors of production using the best available information from a country or countries which it considers appropriate. See 19 U.S.C. § 1677b(c). There is no requirement that Commerce give weight to a respondent's preference for a primary surrogate country with lower cost factors of production. See id. Jiaxing's complaint is based on a misunderstanding of the process by which a primary surrogate country is selected by Commerce and thus fails. Commerce's selection of Thailand as the primary surrogate country is thus supported by substantial evidence.

Nonetheless, Jiaxing argues that no reasonable mind could conclude that Thailand - as opposed to Ukraine - provides the best available information because the Thai data is aberrational and because Ukraine's Metal Expert data is the "most specific." 11 Pls.' Br. at 25; see generally id. at 21-25. Jiaxing argues that Thai steel prices "are well above the prevailing world prices" reported by the World Bank and several other sources, and thus "the Thai steel values must be considered significantly aberrant for this commodity low carbon product." Pls.' Br. at 24. However, Jiaxing does not establish that the difference in price between the Thai data and other data on the record is significant enough to be considered aberrational. 12 As Commerce noted, data is not aberrational simply because it is the lowest or highest data on the record. See Final Decision Memo at 12 (citing Camau Frozen Seafood Processing Imp. Exp. Corp. v. United States , 37 CIT ----, ---- n.9, 929 F.Supp.2d 1352 , 1356 n.9 (2013) ). Commerce also found that Jiaxing had not provided it with annual data from prior years to allow it to assess whether the Thai data was aberrational. Final Decision Memo at 12. As such, Jiaxing fails to show that Commerce's determination that the Thai data was not aberrational is unreasonable. 13

Jiaxing claims further that the Thai data is less specific than the Ukrainian Metal Expert data because it reflects steel wire rod of a "very generic" diameter of less than 14 mm, contains overly fine gradations of carbon that do not "capture [Jiaxing's] purchasing experience," and specifications for silicon and aluminum which are "not known to match [Jiaxing's] steel wire rod inputs." Pls.' Br. at 22-23. However, Jiaxing has not supported these assertions with any evidence that these characteristics mean that the Thai data is so unrelated to the low carbon steel wire rod consumed by Jiaxing as to render Commerce's determination that it was specific unreasonable. It is not this court's role to reweigh the evidence. Jiaxing's argument fails as it does not establish that the Thai GTA data does not meet Commerce's criteria for specificity or that Commerce's determination is otherwise unreasonable.

Jiaxing also argues that Philippine steel wire rod input data is superior because it is corroborated by world prices for low carbon steel. Pls.' Br. at 30. Jiaxing further argues that the fact that the data from the Philippines groups together low carbon and mid carbon steel should not weigh against its specificity because that would only tend to "conservatively overestimate" the surrogate value generated by Commerce, as steel with higher carbon concentrations tends to be more expensive. Id. 14 Neither of these arguments establish that Commerce's selection of Thai data over that of the Philippines is unreasonable. Thai prices have not been shown to be aberrational and the fact that mid carbon steel could possibly "conservatively overestimate" prices does not show that Commerce's determination regarding the Philippine data's lack of specificity is unreasonable. 15 Commerce's selection of Thailand as the primary surrogate country is supported by substantial evidence. 16

Agency action is arbitrary and capricious if "the agency offers insufficient reasons for treating similar situations differently." West Deptford Energy, LLC v. Federal Energy Regulatory Commission , 766 F.3d 10 , 21 (Fed. Cir. 2014). A determination is also arbitrary and capricious if the agency "entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29 , 43, 103 S.Ct. 2856 , 77 L.Ed.2d 443 (1983).

Commerce reasonably found the Thai data reliable. First, Commerce concluded that a 2014 determination that Thai exporters were dumping STR in the United States did not affect the reliability of the Thai import data because the determination only related to Thai exports. 17 Final Decision Memo at 6; see also [STR] from Thailand: Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances , 79 Fed. Reg. 14,476 (Dep't Commerce Mar. 14, 2014) (" 2014 Thai STR ADD Determination "). 18

Second, Commerce determined that a series of reports and communications which raise concerns about the practices of Thai customs officials (the "Customs Reports") did not constitute specific and objective evidence supporting a reason to believe or suspect that the Thai data as to steel imports were distorted. See Final Decision Memo at 6-7; see also Jiaxing's Surrogate Country Selection Comments at Exs. 3-9, PD 63-66, bar codes 3178063-02-04 (Jan. 31, 2014) ("Jiaxing's S. V. Comments"). 19 A "reason to believe or suspect" must be established by "particular, specific, and objective evidence." China Nat'l Mach. Imp. & Exp. Corp. v. United States , 27 C.I.T. 255 , 266-67, 264 F.Supp.2d 1229 , 1239 (2003). Commerce concluded that, while the Customs Reports indicated general concerns as to the practices of Thai customs officials, there was no evidence that these general concerns had any impact on the specific import data in question. 20 Final Decision Memo at 7. Commerce cited the Xanthan Gum Memo in support of its decision. See Final Decision Memo at 7 (citing Issues & Decision Mem. for the Final Determination of the [ADD] Investigation of Xanthan Gum from the [PRC], A-570-985, (May 28, 2013), available at https://enforcement.trade.gov/frn/summary/prc/2013-13220-1.pdf (last visited May 1, 2019) ("Xanthan Gum Memo")). 21

Jiaxing argued that reliance on the Xanthan Gum Memo in this case was inappropriate because the Customs Reports include a number of documents that were not available to Commerce in the Xanthan Gum Memo. See Pls.' Br. at 15. Jiaxing's argument fails, however, as Commerce's reference to the Xanthan Gum Memo did not preclude Commerce from considering the additional documents on the record in these proceedings. Commerce simply stated it could not conclude from the Customs Reports that the "Thai import data under consideration should be rejected as unreliable," and that this conclusion was as "indicated" in the Xanthan Gum Memo. Final Decision Memo at 7. Jiaxing has, moreover, not established that the additional documents on the record in these proceedings provide any more persuasive evidence than those considered in the Xanthan Gum Memo. 22

Third, Commerce found that a consistent difference between Thai import and export prices for the steel wire rod factor of production was not evidence of customs manipulation. Final Decision Memo at 7. Rather, Commerce stated that given the evidence that Thai exporters are dumping steel it was "not surprising that Thai export prices that are tainted with dumping are lower than import prices." Final Decision Memo at 7. 23 Commerce's determination therefore is not arbitrary and capricious. The court sustains Commerce's selection of Thailand as the primary surrogate country.

II. Steel Wire Rod Factor of Production

Having selected Thailand as the primary surrogate country, Commerce calculated the surrogate value of Jiaxing's steel inputs using a simple average of three HTS categories within the Thai data. Final Decision Memo at 17. Jiaxing argues that Commerce should instead use a weighted-average to calculate the surrogate value of steel inputs. See Pls.' Br. at 32-33. 24 Defendant argues that Commerce followed its normal practice in employing a simple average, given that Jiaxing's import and sales data were not reported on a weighted-average basis. See Def.'s Br. at 25. The court sustains Commerce's calculation of the surrogate value of Jiaxing's steel inputs.

Commerce concluded it was unable to accurately calculate a weighted-average because Jiaxing's import and sales data were reported on different bases. Final Decision Memo at 17. Jiaxing has not established that its import and sales data was reported on a weighted-average basis. As such, Commerce reasonably employed a simple average in calculating the surrogate value of steel inputs using three Thai HTS categories.

III. SG & A Labor

Jiaxing argues Commerce double counted SG & A labor costs because Commerce used data to value manufacturing labor costs that included costs associated with SG & A labor. See Pls.' Br. at 33-36. Defendant argues Commerce was not required to adjust Jiaxing's surrogate financial ratios because Commerce reasonably concluded the data used to value manufacturing labor did not contain SG & A labor costs. See Def.'s Br. at 25-27. For the reasons that follow, the court remands Commerce's calculation of Jiaxing's surrogate financial ratios as related to SG & A labor.

In the calculation of normal value in a nonmarket economy the statute provides for the separate valuation of the "hours of labor required" in producing subject merchandise and of additional expenses (i.e., "general" and "other" expenses). See 19 U.S.C. § 1677b(c)(3)(A). In identifying the "hours of labor required" as a factor of production, the statute does not distinguish between labor expended to produce subject merchandise (i.e., "production" labor) and labor expended in performing non-production activities (i.e., "non-production" labor), such as labor associated with the performance of SG & A functions. Id. Commerce accounts for SG & A costs (including SG & A labor costs) through "surrogate financial ratios" derived from financial statements of companies in the surrogate market economy country. See 19 C.F.R. § 351.408 (c)(4) ; 19 U.S.C. § 1677b(c)(1) ; Dorbest , 604 F.3d at 1368 .

Commerce may make adjustments to the calculation of surrogate financial ratios to avoid double counting labor costs where the data used to value the labor factor of production includes costs associated with SG & A labor. See Antidumping Methodologies in Proceedings Involving Non-Market Economies: Valuing the Factor of Production: Labor , 76 Fed. Reg. 36,092 at 36,093 -94, (Dep't Commerce June 21, 2011) (stating "the Department will adjust the surrogate financial ratios when the available record information - in the form of itemized indirect labor costs - demonstrates that labor costs are overstated"); see also Issues & Decision Mem. for the Final Determination of the [ADD] Investigation of Drawn Stainless Steel Sinks from the [PRC] at 15, A-570-983, (Feb. 19, 2013), available at https://enforcement.trade.gov/frn/summary/prc/2013-04379-1.pdf (last visited May. 1, 2019) (stating that "because the NSO data include all labor costs, the Department has treated itemized SG & A labor costs in the surrogate financial statements as a labor expense rather than an SG & A expense, and we have excluded those costs from the surrogate financial ratios."). Double counting is, as a general rule, not permitted because it distorts antidumping margin calculations. See, e.g. , DuPont Teijin Films China Ltd. v. United States , 38 CIT ----, ----, 7 F.Supp.3d 1338 , 1345-46 (2014).

To value labor costs as a factor of production directly associated with manufacturing Jiaxing's STR, Commerce employed data from Thailand's Labor Force Survey of Whole Kingdom published by the National Statistical Office of the Government of Thailand ("NSO Data"). See Final Decision Memo at 19; Commerce's Prelim. S.V. Memo at 6-9, Exs. 7-9. Commerce used the costs of "manufacturing" labor identified in the "Industry" column in Tables 15 and 16 of the NSO Data to derive a single country industry-specific wage rate denominated in US dollars. See Commerce's Prelim. S. V. Memo at Exs. 7A-7B at Tables 15-16. 25 Commerce did not make any adjustments to the calculation of the surrogate financial ratios to avoid double counting SG & A labor costs. See Final Decision Memo at 21. Commerce justified its decision to not make any such adjustments by claiming that the "manufacturing" labor input from the NSO Data did "not include SG & A labor because the labor source identifies individual data line items for 'manufacturing' and 'administrative and support activities.' " Id.

Commerce's conclusion is unsupported by substantial evidence as Commerce failed to consider record evidence which supports an alternative conclusion. 26 Commerce did not address Table 8 of the NSO Data, titled "Employed Persons by Occupation and Industry," which lists nine different occupations included within the "manufacturing" industry: (1) legislators, senior officials and managers; (2) professionals; (3) technicians and associate professionals; (4) clerks; (5) service workers and shop and market sales workers; (6) skilled agricultural and fishery workers; (7) craft and related trades workers; (8) plant and machine operators and assemblers; and, (9) elementary occupations. Commerce's Prelim. S. V. Memo at Exs. 7A-7B at Table 8. The list of occupations included in the "manufacturing" industry in Table 8 of the NSO Data indicates that, in addition to those occupations directly associated with manufacturing ("plant and machine operators and assemblers" and "elementary occupations"), a significant number of individuals in occupations associated with SG & A labor costs are also identified as working in the "manufacturing" industry ("senior officials and managers," "professionals," "technicians and associate professionals," and "clerks"). Id. 27

The inclusion of occupations not directly associated with manufacturing when calculating the cost of labor directly associated with manufacturing potentially double counts labor costs associated with SG & A labor. As Table 18 of the NSO Data shows, the average income of managers, professionals, and technicians is considerably higher than for the plant and machine operators and elementary occupations. Id. at Table 18 (titled "Employee by Occupation, Income Class"); see also Pls.' Br. at Ex. 3 (summarizing the difference in income of different occupations). Inclusion of the income of these occupations inflates the cost of manufacturing labor above what manufacturing labor would cost if it was simply derived from the average income of occupations directly associated with manufacturing.

Defendant argues that Commerce's conclusion is reasonable because the category of "administrative and support services" itself also includes low-skilled manual labor such as "plant and machine operators and assemblers" and "elementary occupations." Def.'s Br. at 26 (citing Commerce's Prelim. S. V. Memo at Ex. 7A at Table 8). This response is not convincing as it does not detract from the fact that various occupations associated with SG & A labor costs are clearly listed in Table 8 as within the "manufacturing" industry. Commerce has, consequently, failed to consider record evidence that detracts from Commerce's determination. See Universal Camera Corp. , 340 U.S. at 488 , 71 S.Ct. 456 . Commerce's calculation of Jiaxing's surrogate financial ratios as related to labor is thus unsupported by substantial evidence and is remanded for further explanation or reconsideration consistent with this opinion.

IV. B & H Costs

Jiaxing makes three arguments regarding B & H costs. First, Jiaxing argues that Commerce unreasonably selected the World Bank's "Doing Business 2014: Thailand" report to value Jiaxing's B & H costs instead of the reported costs of Pakfood Company Limited ("Pakfood"). See Pls.' Br. at 36-40. Second, Jiaxing argues that if Commerce is permitted to use the "Doing Business 2014: Thailand" report, it should exclude costs associated with letters of credit in calculating B & H costs. See id. at 40-42. Third, Jiaxing argues that Commerce's assumption in the calculation of B & H costs that each shipping container weighs 10,000 kilograms is unsupported by substantial evidence. See id. at 42-45. Defendant responds that Commerce properly calculated the surrogate value for B & H costs. See Def.'s Br. at 27-31. The court sustains Commerce's reliance on the "Doing Business 2014: Thailand" report to value B & H costs. However, the court remands Commerce's decision not to make adjustments for costs associated with acquiring letters of credit and the weight assigned to shipping containers in the calculation of B & H costs are unsupported by substantial evidence.

A. The "Doing Business 2014: Thailand" Report

In calculating normal value, Commerce subtracts "costs, charges, and expenses incident to bringing the foreign like product from the original place of shipment to the place of delivery to the purchaser." 19 U.S.C. § 1677b(a)(6)(B)(ii). The subtraction of these costs from a respondent's normal value is intended to allow a fair comparison to net (or "ex-factory") prices, which are not affected by the extra costs experienced by an exporter in shipping products around the world. These movement expenses include B & H costs, among others. Commerce calculates a surrogate value for movement expenses in nonmarket economies.

Commerce valued Jiaxing's B & H costs using the "Doing Business 2014: Thailand" report. 28 See Final Decision Memo at 23-26; see also Commerce's Prelim. S. V. Memo at Ex. 15. Commerce selected the "Doing Business 2014: Thailand" report because it was from the primary surrogate country and met "all of the Department's criteria" for surrogate values, including that the data was "only two months outside the [period of review] and ... based on a broad survey of costs in the Thailand market." Final Decision Memo at 23.

Commerce reasonably determined that the "Doing Business 2014: Thailand" report constituted the best available information, as compared to the reported B & H costs of Pakfood, because it "reflects a broader experience than simply the experience of a single company." Id. at 24. 29 Jiaxing argues that the "Doing Business 2014: Thailand" report is unrepresentative of a broad market average because it is "based upon a hypothetical company's one-time hypothetical shipment of hypothetical merchandise at a hypothetical weight with a hypothetical value." Pls.' Br. at 39. Jiaxing does not, however, substantiate why being "hypothetical" should render the "Doing Business 2014: Thailand" report unrepresentative. Commerce's response to this argument is reasonably discernible from its discussion of the merits of relying on the "Doing Business 2014: Thailand" report over the data from Pakfood. See Final Decision Memo at 24-25. Commerce explained that the Doing Business reports represent a broad market average because they are based on "companies' actual experience" and to prepare them the World Bank gathers "comprehensive quantitative data to compare business regulation environments across economies and over time." Id. at 25. In contrast, Jiaxing's proposed alternative - the reported B & H costs of Pakfood - relies simply on the costs of a single exporter. Commerce's use of the "Doing Business 2014: Thailand" report is thus supported by substantial evidence as Commerce reasonably found that the "Doing Business 2014: Thailand" report was more representative of a broad market average than the alternative. See id.

Although Jiaxing argues that the "Doing Business 2014: Thailand" report is unreliable because it does not specify whether the contributors have any relevant experience, Commerce reasonably inferred that the contributors had relevant experience. Pls.' Br. at 37-38. 30 The World Bank's description of the contributors to the "Doing Business 2014: Thailand" report provides a full list of the names of all entities which participated in the report as a whole. See Attachment to the Record at Ex. 22, PD 157, bar code 3810231-01 (Aug. 18, 2014) ("Doing Business Thailand - Contributors"). The World Bank also provides a separate table identifying the number of contributors specifically relied on by each chapter of the report. See id. , at Ex. 22 at 1. The table identifying the number of contributors to each chapter of the report does not specify the names of those entities. See id. This table makes clear that there were five entities which provided information to the "Trading Across Borders" chapter of the "Doing Business 2014: Thailand" report, but does not provide a means of identifying who specifically these five contributors were. See id. As noted by Commerce, however, the report's full list of participants includes freight forwarders, shipping lines, banks, law firms and accounting firms. Final Decision Memo at 24. Commerce reasonably inferred that the five contributors to the "Trading Across Borders" chapter were likely to have been those with relevant experience, such as with exporting customers or the freight-forwarding business. See id. Jiaxing's argument that the contributors may have had no relevant experience thus fails as it is speculative. See Pls.' Br. at 37.

Nonetheless, Jiaxing contends that it is unreasonable of Commerce to select the "Doing Business 2014: Thailand" report as the best available information to calculate a surrogate value for B & H costs for Jiaxing's STR because there is no raw data from the questionnaires underlying the "Doing Business 2014: Thailand" report. Pls.' Br. at 36. Jiaxing claims this is "a standard that this Court has recently required from the Department as a predicate for relying on Thai surrogate value data sources." Id. (citing Elkay Mfg. Co. v. United States , 38 CIT ----, ----, 34 F.Supp.3d 1369 , 1382 (2014) (" Elkay I "), and Elkay Mfg. Co. v. United States , 39 CIT ----, ----, Slip Op. 15-33, 12-13, 2015 WL 1786940 (Apr. 20, 2015) (" Elkay II ")). However, neither of the opinions cited by Jiaxing support its argument as they do not stand for a proposition that raw survey data is a "predicate for relying on Thai surrogate value data sources." 31 For the reasons above, Commerce's use of the "Doing Business 2014: Thailand" report to value Jiaxing's B & H costs is supported by substantial evidence.

B. Letters of Credit

Commerce did not subtract fees for obtaining letters of credit from the B & H costs derived from the "Doing Business 2014: Thailand" report because it concluded that the evidence on the record did not establish that such costs were incorporated into that report. Final Decision Memo at 26. Commerce's decision is unsupported by substantial evidence because it fails to consider evidence which detracts from its determination, and arbitrary and capricious because it fails to address the inconsistency of its conclusion with past practice. 32

It is Commerce's practice to exclude the cost of obtaining letters of credit from the total B & H cost derived from the World Banks's "Doing Business" series "when record evidence can be linked to the specific report" used. Final Decision Memo at 25-26 (citing Monosodium Glutamate From the [PRC]: Final Determination of Sales at Less Than Fair Value and the Final Affirmative Determination of Critical Circumstances , 79 Fed. Reg. 58,326 (Dep't of Commerce Sept. 29, 2014) ; Monosodium Glutamate from the [PRC]: Issues and Decision Mem. for the Final Determination of Sales at Less Than Fair Value at 9-10, A-570-932, (Sept. 22, 2014), available at https://enforcement.trade.gov/frn/summary/prc/2014-23136-1.pdf (last visited May 1, 2019) ("Monosodium Glutamate Memo")). Commerce may depart from a prior practice so long as it provides a reasoned explanation for its change. See Rust v. Sullivan , 500 U.S. 173 , 187, 111 S.Ct. 1759 , 114 L.Ed.2d 233 (1991) ; State Farm , 463 U.S. at 42 , 103 S.Ct. 2856 .

Jiaxing provided correspondence which established that earlier iterations of the World Bank's "Doing Business" series incorporated the costs of acquiring letters of credit and that, at least as of 2011, it was the intention of the World Bank to continue to include the cost of acquiring letters of credit in later publications. See Jiaxing's S. V. Comments at Ex. 20, PD 70, bar code 3178063-09 (Jan. 31, 2014). The first piece of evidence is an email dated April 10, 2013, which provides the "[t]he cost to obtain the export letter of credit" for "the Philippines 2013," "Indonesia 2013," and "Thailand 2013." Id. The second is an email chain from September 2011 which states that the "Doing Business Report - includes the time and cost to obtain a letter of credit." Id. The third is a letter dated September 23, 2011, from a representative of the World Bank who confirms that the cost of obtaining a letter of credit is embedded in the World Bank's "Doing Business" reports. Id. The letter states that the "World Bank applies the same methodology in each country and from year to year to ensure that the results are reasonably comparable." Id. The letter further states that "the World Bank confirms that the cost of a letter of credit has always been and continues to be included in the reported figures for brokerage and handling." Id. Jiaxing's evidence also appears to be consistent with the World Bank's contemporaneous description of the methodology for the "Doing Business 2014: Thailand" report, which states that "the time, cost and documents required for the issuance or advising of a letter of credit are taken into account." See Attachment to the Record at Ex. A at 1, PD 156, bar code 3798217-01 (2013) ("Trading Across Borders Methodology").

Despite this evidence, Commerce held "there is no information on the record of this administrative review regarding whether the cost of obtaining letters of credit is included in the cost of B & H for Doing Business 2014: Thailand." Final Decision Memo at 25 (emphasis omitted). Commerce concluded that it would not adjust the B & H costs in the "Doing Business 2014: Thailand" report because "the record evidence in this review regarding the letter of credit costs refers to Doing Business 2013 but does not specify whether these costs are also included in Doing Business 2014: Thailand." Final Decision Memo at 26 (emphasis omitted).

Commerce supports its decision through reference to the Monosodium Glutamate Memo, in which Commerce refused to treat the same evidence as submitted in these proceedings (which contains information as to the costs of acquiring letters of credit contained in the "2013 Doing Business: Indonesia" report) as persuasive with respect to the "2014 Doing Business: Indonesia" report. See Monosodium Glutamate Memo at 9-10. However, in the Hardwood and Decorative Plywood Memo, Commerce accepted the same evidence as persuasive with respect to the World Bank's "Doing Business 2013: Bulgaria" report. See Hardwood and Decorative Plywood From the People's Republic of China: Final Determination of Sales at Less Than Fair Value , 78 Fed. Reg. 58273 (Dep't of Commerce Sept. 23, 2013) ; [ADD] Investigation of Hardwood & Decorative Plywood from the [PRC]: Issues & Decision Mem. for the Final Determination at 75-76, A-570-986, (Sept. 16, 2013), available at https://enforcement.trade.gov/frn/summary/prc/2013-23088-1.pdf (last visited May 1, 2019) ("Hardwood and Decorative Plywood Memo"). As the record in the Hardwood and Decorative Plywood Memo only contained information about the cost of acquiring letters of credit for Thailand, the Philippines, and Indonesia, these costs were averaged and deducted from the surrogate B & H costs in the World Bank's "Doing Business 2013: Bulgaria" report. See Hardwood and Decorative Plywood Memo at 75-76. These two determinations appear inconsistent and Commerce provides no explanation as to why it previously considered the same evidence persuasive as to reports issued for different countries, but not as to reports issued in different years.

Commerce's determination is unsupported by substantial evidence because it failed to consider record evidence that the "Doing Business" series has the "same methodology in each country and from year to year." See Jiaxing's S. V. Comments at Ex. 20, PD 70, bar code 3178063-09 (Jan. 31, 2014). Commerce's decision to not deduct for the cost of acquiring letters of credit was also arbitrary and capricious because Commerce failed to explain the apparent inconsistency with past practice. On remand, Commerce must reconsider its determination or explain why its conclusion is nonetheless reasonable in light of the record evidence.

C. Shipping Container Weight

After determining a surrogate B & H cost for each 20-foot shipping container from the "Doing Business 2014: Thailand" report, Commerce calculated a per kilogram B & H cost by assuming that each shipping container contained product weighing 10,000 kilograms. Final Decision Memo at 27-28. Jiaxing argues that Commerce's decision to divide the B & H cost by 10,000 kilograms is unreasonable as the "Doing Business 2014: Thailand" report does not support a conclusion that the typical weight of a 20-foot shipping container is 10,000 kilograms. See Pls.' Br. at 42-43. Defendant responds that Commerce's decision is reasonable because the 10,000 kilogram figure is consistent with the survey data underlying the "Doing Business 2014: Thailand" report. See Def.'s Br. at 30. For the reasons that follow, Commerce's decision is unsupported by substantial evidence.

Commerce generated a surrogate B & H cost for each shipping container of STR shipped by Jiaxing to the United States of $ 385 by combining the costs for document preparation ($ 175), customs clearance and technical control ($ 50), and ports and terminal handling ($ 160) described as associated with exporting a 20-foot shipping container in the "Doing Business 2014: Thailand" report. See Commerce's Prelim. S. V. Memo at Ex. 12, Ex. 15 at 78; see also Final Decision Memo at 27-28. Commerce then derived a surrogate average per kilogram B & H cost by dividing $ 385 by 10,000 kilograms. See Commerce's Prelim. S. V. Memo at Ex. 11, Ex. 15 at 78. Similarly, a "[c]ost per kilogram per kilometer" rate was derived for the cost of truck freight using the same 10,000 kilogram figure for each 20-foot shipping container. Id. at Ex. 11. Commerce stated that this 10,000 kilograms figure was selected because it was "the standard cargo weight of a 20-ft standard container" used in the "Doing Business 2014: Thailand" report. See id. at Exs. 11-12; see generally Final Decision Memo at 27-28.

The World Bank's contemporaneous description of the methodology for the "Doing Business 2014: Thailand" report states that the report makes certain assumptions about the businesses and traded goods described in the reports to ensure comparability across different economies. See Trading Across Borders Methodology at Ex. A at 1. These assumptions include that the product travels in a dry-cargo, 20-foot, full container load, that weighs 10,000 kilograms, and that it is valued at $ 20,000. See id. However, the report provides B & H costs on a "per container" basis. See Commerce's Prelim. S. V. Memo at Ex. 15 at 75. The report does not expressly state that B & H costs are dependent on a specific weight of a 20-foot container of goods. See id. at 72-79.

Commerce stated that it was necessary to assume each shipping container weighs 10,000 kilograms when calculating Jiaxing's B & H costs per kilogram of STR because the survey data underlying the "Doing Business 2014: Thailand" report contained an assumption that a 20-foot container weighed 10,000 kilograms. Final Decision Memo at 27. Commerce concluded, then, that to change the weight from 10,000 kilograms would affect the relationship between costs and quantity in the survey data used to prepare the "Doing Business 2014: Thailand" report. Id. at 27-28. However, Jiaxing claims that evidence on the record shows that B & H costs are only affected by "whether the container was full or partial." Pls.' Br. at 43. 33 In the Final Decision Memo, Commerce did not consider this evidence. Jiaxing's evidence that B & H costs, such as the cost of document preparation, customs clearance and technical control, and ports and terminal handling, are not affected by the weight of a particular shipping container require at least some consideration. Commerce's conclusion is unsupported by substantial evidence, as it fails to address Jiaxing's evidence that weight is unrelated to B & H costs. As such, Commerce's decision is remanded for further explanation or reconsideration.

CONCLUSION

For the reasons set forth above, the Final Results are sustained in part and remanded in part. Accordingly, it is ORDERED that Commerce's selection of Thailand as the primary surrogate country is sustained; and it is further

ORDERED that Commerce's surrogate valuation of Plaintiffs' steel wire rod factor of production is sustained; and it is further

ORDERED that Commerce's calculation of Plaintiffs' surrogate financial ratios as related to labor is remanded for further explanation or reconsideration consistent with this opinion; and it is further

ORDERED that Commerce's use of the "Doing Business 2014: Thailand" report for the valuation of Plaintiffs' brokerage and handling costs is sustained; and it is further

ORDERED that Commerce's determination not to adjust Plaintiffs' surrogate brokerage and handling costs to take into account the cost of acquiring letters of credit is remanded for further explanation or reconsideration consistent with this opinion; and it is further

ORDERED that Commerce's use, in calculating Plaintiffs' brokerage and handling costs, of an assumed weight of 10,000 kilograms for a 20-foot shipping container is remanded for further explanation or reconsideration consistent with this opinion; and it is further

ORDERED that Commerce shall file its remand redetermination with the court within 90 days of this date; and it is further

ORDERED that the parties shall have 30 days thereafter to file comments on the remand redetermination; and it is further

ORDERED that the parties shall have 30 days thereafter to file their replies to comments on the remand redetermination.