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Defendant first contends Commerces determination that it could ignore the fluctuation of the rupee in a manner consistent with the statutory goal of accurate dumping margin calculations is supported by substantial evidence on the record and otherwise in accordance with law. Defendant argues the Remand Determination demonstrates that the rupees gradual depreciation gave Commerce a legitimate reason to have considered the devaluation a fluctuation to be ignored. (Defendants Memo at 8-9.)
Defendant counters Virajs argument that Commerce should have calculated the dumping margin using the rupees actually received, claiming that to do so would have contradicted the statutory requirement that Commerce use the exchange rate in effect on the date of sale of the subject merchandise; the only statutory exception, inapplicable here, allows for use of an exchange rate specified in a forward sale agreement. Id. at 10. Defendant asserts the statute provides that exchange rate fluctuations shall be ignored and Commerce has adequately explained why it appropriately ignored the rupees fluctuations in this case. Id.
Defendant contends the Court should sustain Commerces Remand Determination even if it did not result in the most accurate dumping margin possible. Defendant argues that the Federal Circuits position in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 13 F.3d 398 (Fed. Cir. 1994), cert. denied, 513 U.S. 813 (1994) conflicts with this Courts position that the Court must assess whether Commerces actions further the antidumping statutes underlying goal of accuracy. Defendant cites Ad Hoc for the proposition that, where the Act itself clearly expresses the intent of Congress, the reasonableness of Commerces interpretation of the Act is irrelevant. (Defendants Memo at 12, citing Ad Hoc, 13 F.3d at 402-403.) Defendant acknowledges the Federal Circuit has stated in several decisions that Commerce must determine margins as accurately as possible, and the Statement of Administrative Action expresses the intent that dumping margins be undistorted by currency conversion practices. However, Defendant asserts these statements are hortatory in nature such that specific statutory provisions that evince the intent of Congress must be followed even if the result appears to be an unfair or inaccurate dumping margin. (Defendants Memo at 13.) Because Commerce has followed the clear directive of the currency conversion statute, Defendant asserts the Remand Determination should be sustained. Id.
The issue before this Court is whether Commerces application of its standard currency conversion methodology resulted in an accurate dumping margin. The Federal Circuit and this Court have repeatedly acknowledged that fairness and accuracy are underlying statutory goals of dumping margin determinations.1 In addition, the Statement of Administrative Action (SAA) states that [t]o a large extent, the Agreement tracks existing practice, the goal of which is to ensure that the process of currency conversion does not distort dumping margins.2 Uruguay Round Agreements Act, Statement of Administrative Action, H.R. DOC. NO. 103-316, at 841 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4177 (SAA) (emphasis added).
The provision at issue in 19 U.S.C. § 1677b-1 states:
(a) In general
In an antidumping proceeding under this subtitle, the administering authority shall convert foreign currencies into United States dollars using the exchange rate in effect on the date of sale of the subject merchandise, except that, if it is established that a currency transaction on forward markets is directly linked to an export sale under consideration, the exchange rate specified with respect to such currency in the forward sale agreement shall be used to convert the foreign currency. Fluctuations in exchange rates shall be ignored.
Commerce appears to argue that it is obligated to follow the express direction of the statute and ignore fluctuations even if they distort dumping margins in a manner that appears unfair. Nevertheless, where there is a fundamental change in the underlying value of the currency, Commerce is required by its own policy to make an adjustment. In this case, during the period of review of approximately twelve months the value of the rupee declined an average of 1.1 percent per month. See Remand Determination at 4. At the end of the period of review, the cumulative declination was 14.6 percent. Id. Commerce argues that it was appropriate to ignore the 1.1 percent declination in value on a monthly basis and to ignore the overall 14.6 percent declination in the value of the rupee during the period of review.
Although Congress clearly intended Commerce to further its goal of accuracy in the currency conversion process, it did not define all terms of that process. Neither the statute, the SAA, nor the Uruguay Round Agreements define the term fluctuations. Because the statute is silent regarding the meaning of fluctuations, Commerce appears to have been given discretion in its approach to the term. The SAA does state the intent that Commerce will promulgate regulations implementing the [currency conversion] requirements of section 773A [or 19 U.S.C. 1677b-1]. SAA at 841. Rather than address the meaning of the term fluctuations through regulations, Commerce did so through Policy Bulletin 96-1, which creates two versions of the termone to be ignored and the other to be acknowledged. See Notice: Change in Policy Regarding Currency Conversions, 61 Fed. Reg. 9,434 (Mar. 8, 1996) (Policy Bulletin 96-1). An actual daily rate that varies from the benchmark rate by more than 2.25 percent is treated as a fluctuation, and an actual daily rate that varies within 2.25 percent from the benchmark rate is treated as normal. In addition, Commerce recognized that whenever the decline in the value of a foreign currency is so precipitous and large as to reasonably preclude the possibility that it is only fluctuating, the lower actual daily rates will be employed from the time of the large decline. Id. at 9,436. Finally, Policy Bulletin 96-1 indicates it may be appropriate to use daily rates in those situations where the foreign currency depreciates substantially against the dollar over the period of investigation or the period of review. Id. at 9,435 n.2.
Commerce has in the past exercised discretion in deciding whether to apply its standard methodology or whether to apply the lower daily rate because the decline in the value of [the] foreign currency [was] so precipitous and large as to reasonably preclude the possibility that it [was] only fluctuating. Policy Bulletin 96-1, 61 Fed. Reg. at 9,436. The wons 40 percent decline over two months in Stainless Steel from Korea and the bahts 18 percent drop in one day in Pipes and Tubes from Thailand are obvious examples of the precipitous and large declines to which Commerce refers. Commerce, however, declined to define precipitous and large in Policy Bulletin 96-1, leaving this determination to be made in future cases. Certain Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty Administrative Review, 64 Fed. Reg. 56,759, 56,764 (Oct. 21, 1999).
This Court does not suggest that the rupees gradual change is factually identical to the rapid and large declines in value of the won and baht. However, the rupees downward movement, while small and gradual, appears cumulatively to have had more than a de minimis effect upon Commerces dumping margin calculations. Here, the lag time between the established date of sale and the receipt of payment, together with the effect of the rupees devaluation upon imported raw material costs and actual payment received, cause this Court to question whether Commerces use of its standard methodology in this case falls within the range of permissible construction of the statute. Thai Pineapple, 273 F.3d at 1085. The statute may permit various methodologies, but it is possible for the application of a particular methodology to be unreasonable in a given case when a more accurate methodology is available and has been used in similar cases. Id. at 1085. This case, although factually distinguishable from Stainless Steel from Korea and Pipes and Tubes from Thailand, is no different in principle from cases in which Commerce has modified its approach. Id. (emphasis added).
In its Remand Order, the Court requested that Commerce explain whether its currency conversion methodology resulted in an accurate dumping margin. Only two statements in the Remand Determination appear to comply with this request. The first explains that because of the absence of extraordinary aspects to the observed movement in the rupee, the record supports the Departments decision to treat the depreciation of the rupee as a fluctuation that could be ignored in a manner consistent with the overriding statutory goal of calculating accurate dumping margins. Remand Determination at 5. The second states that Virajs [sic] makes an opportunistic claim for the Department to account for rupee depreciation that all agree would lower the calculated dumping margin. Id. The first statement is conclusory. The second appears to concede inaccuracy.
This Court therefore remands once again to Commerce to consider whether the application of its standard currency conversion methodology in this case is the most accurate method available to reach a dumping margin undistorted by the rupees devaluation during the period of review. The Court notes that in the preamble to the final rule Commerce stated, We agree . . . that we should address depreciating currencies more fully in a final model, and we welcome further suggestions on this point. Antidumping Duties; Countervailing Duties: Final Rule, 62 Fed. Reg. 27,296, 27,377 (May 19, 1997). Commerce does not appear to have addressed depreciating currencies more fully, however, and this Court invites Commerce to consider whether the circumstances of this case present an opportunity to do so.
In addition, in response to Plaintiffs argument that Commerce used the exchange rate at purchase order date to determine rupees received by Viraj, but the post-devaluation exchange rate to determine costs, this Court notes that it is not clear from the record whether Commerce used the exchange rate on the date of sale for one part of its calculation and the changed exchange rate for another. If Commerce did apply a different rate for Virajs costs, this would appear to skew the calculations unfairly to the importer. As part of this remand, the Court therefore directs Commerce to explain if different rates were used, if this was appropriate, and if not appropriate, to make any necessary corrective calculations.
Finally, Commerce has emphasized that the change in the currency exchange rate did not influence Virajs pricing decisions. Commerce is nevertheless directed to explain where there is a long-term declination in the value of a foreign currency during the period of review by as much as 14.6 percent, how such a long-term substantial declination can be ignored if Commerce is to arrive at an accurate and fair dumping margin and not embrace an absurd result.
Because Commerce failed adequately to explain whether its currency conversion methodology furthers the antidumping statutes requirement of a fair comparison in this dumping determination, and because other more accurate methodologies may exist to do so, this Court remands to Commerce (1) to consider how to apply a currency conversion methodology that best reaches an accurate dumping margin in this case; (2) if necessary, to recalculate Plaintiffs dumping margin using a methodology that furthers the congressional goal of accuracy in dumping determinations; (3) to explain if different currency exchange rates were used in Commerces dumping margin calculations, if the use of different rates was appropriate, and if not appropriate, to make any necessary corrective calculations; and (4) to explain the significance of Plaintiffs pricing decisions to Commerces determination of whether the change in rupee valuation in this case constituted a fluctuation to be ignored.
Gregory W. Carman
Dated: February 26, 2002
New York, New York
1. See, e.g., Micron Tech., Inc. v. United States, 243 F.3d 1301, 1313 (Fed Cir. 2001) (The overarching purpose of the antidumping statute is to permit a fair, apples to apples comparison between foreign market value and United States price . . . .) (internal quotations omitted); NTN Bearing Corp. v. United States, 74 F.3d 1204, 1208 (Fed. Cir. 1995) (stating the antidumping laws are remedial not punitive); Koyo Seiko Co., Ltd. v. United States, 36 F.3d 1565, 1573 (Fed. Cir. 1994) (noting one of the purposes of the antidumping laws is to calculate antidumping duties on a fair and equitable basis); Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990) (acknowledging the basic purpose of the statute: determining current margins as accurately as possible); Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United States, 102 F. Supp. 2d 486, 495 (Ct. Intl Trade 2000) (stating that any given methodology must always seek to effectuate the statutory purposecalculating accurate dumping margins); Borlem S.A.-Empreedimentos Industriais v. United States, 718 F. Supp. 41, 48 (Ct. Intl Trade 1989) (finding Congress would not authorize proceedings that are so flawed with inaccurate facts that different results would obtain if accurate facts were used).
2. The currency conversion elements of the Uruguay Antidumping Agreement must be read within the context of required fair comparisons. Article 2.4 of the Uruguay Antidumping Agreement requires that [a] fair comparison shall be made between the export price and the normal value in dumping determinations. It subsequently lists the currency conversion requirements also found in 19 U.S.C. § 1677b-1.
United States domestic law echoes the fairness requirement. In determining whether merchandise is being or is likely to be, sold at less than fair value, a fair comparison shall be made between the export price or constructed export price and normal value. 19 U.S.C. § 1677b(a).