Zeroing OK in commerce's review of staple fiber duties - CIT (Taiwan)

The U.S. Court of International Trade on Wednesday upheld the U.S. Department of Commerce's use of a controversial method of calculating anti-dumping duties in its administrative review of a duty order on polyester staple fibers from Taiwan, finding Commerce’s use of zeroing was reasonable.

Chief Judge Donald C. Pogue rejected the zeroing challenge Taiwan-owned Far Eastern New Century Corp. launched in October against Commerce's administrative dumping review of an order placed on its polyester staple fiber, used as stuffing in sleeping bags and furniture, saying the CIT has found that Commerce's method has not been rejected by the Federal Circuit.

Zeroing—which treats any instance of negative dumping as a zero so the margin is calculated based only on the dumped prices—is no longer used in U.S. investigations, but the country continues to use the method in its administrative reviews of existing duty orders. Far Eastern held that Commerce should have reviewed its duties using the more commonly used "offset" method, in which the differences between the export price of goods and the price for which the goods sell in their home market are averaged.

Moreover, the judge found that Commerce's defense of its zeroing policy was in agreement with the CIT’s earlier decision in Grobest & I-Mei Indus v. United States.

"As Commerce's explanation here is in line with its explanation in Grobest, as a matter of efficiency this court will follow its recent opinion in Grobest on the issue of zeroing and affirm Commerce’s explanation as reasonable," Judge Pogue wrote.

In Grobest, the CIT found that Commerce's decision to adjust its methodology to seek overall pricing behavior in its investigations and more accurate duties in reviews by using zeroing in reviews but not in investigations, is a reasonable interpretation of the law.

At issue is Commerce's continued use of the zeroing methodology—which treats any instance of negative dumping as a zero, so that the margin is calculated based only on dumped prices—instead of the more commonly used "offset" method in which the differences between the export price of goods and the price for which the goods sell in their home market are averaged.

Though the U.S. stopped the use of zeroing in original investigations several years ago, it had continued to use it in administrative reviews of existing duty orders.

Judge Pogue also remanded the case back to Commerce on the issue of the department's stated revision of Far Eastern's selling, general, and administrative expenses, finding Commerce and Far Eastern are basically in agreement about an alleged ministerial error made in the calculation of the expenses ratio.

"Here, because both parties agree that the issue should be remanded, the court will grant Commerce's request and this issue is remanded to Commerce for further consideration," the judge wrote.

An attorney for Far Eastern, Peter J. Koenig of Squire Sanders LLP, said the company, like many others, is just waiting until the matter is fully settled in litigation ahead of its own.

Taiwan-based polyester staple fiber companies have garnered some attention from U.S. trade authorities in recent years.

The U.S. International Trade Commission determined in August 2011 that revoking the existing anti-dumping duty orders on polyester staple fiber from Taiwan would likely hurt the U.S. industry.

In July 2010, Commerce increased an anti-dumping duty margin on polyester staple fiber made by Far Eastern by 15 percent following the agency's determination that the Taiwan-based company sold the merchandise below the standard price.

Far Eastern is represented by Peter J. Koenig of Squire Sanders LLP

The case is Far Eastern New Century Corp. v. United States, case number 11-00415 in the U.S. Court of International Trade.