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Slip Op. 02-24
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: GREGORY W. CARMAN, CHIEF JUDGE
___________________________________ VIRAJ GROUP, LTD. Court No. 00-06-00291 UNITED STATES, and CARPENTER TECHNOLOGY, CORP., et al., WAREHOUSEMEN'S UNION, ___________________________________ Ablondi, Foster, Sobin & Davidow (Peter Koenig), Washington, D.C., for Plaintiff.
Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Lucius B. Lau, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; David W. Richardson, Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, of Counsel, for Defendant.
Collier Shannon Scott, PLLC (Robin H. Gilbert, Laurence J. Lasoff), Washington, D.C., for Defendant-Intervenors.
OPINION
CARMAN, Chief Judge: Exercising jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994), this Court reviews the Department of Commerce’s (Commerce) Final Results of Redetermination Pursuant to Court Remand, Viraj Group, Ltd. v. United States of America and Carpenter Technology, Corp., et al., Slip Op. 01-104 (CIT August 15, 2001) (Remand Determination) to determine whether Commerce’s approach to the Indian rupee’s devaluation during the administrative review period, December 1, 1997 through November 30, 1998, is supported by substantial evidence on the record and otherwise in accordance with law.
BACKGROUND
In Plaintiff Viraj Group, Ltd.’s (Plaintiff or Viraj) initial challenge before this Court, Plaintiff raised the issue of whether the exchange rate used by Commerce to convert Indian rupees into United States dollars had created an inaccurate dumping margin in Stainless Steel Wire Rod From India; Final Results of Antidumping Duty Administrative Review, 65 Fed. Reg. 31,302 (May 17, 2000) (Final Results). Specifically, Plaintiff argued that use of the November 3, 1997 exchange rate distorted dumping margin calculations because the rupee’s subsequent devaluation required Viraj to pay more rupees for imported raw materials. Viraj ultimately recovered its higher cost of production because the devaluation caused it to receive more rupees for the U.S. dollar price of its subject merchandise. Commerce’s use of the earlier exchange rate, however, failed to reflect this offset and caused an understatement of the rupees actually received, resulting in a dumping margin.
This Court remanded this issue to Commerce but sustained the remainder of the Final Results in Viraj Group, Ltd. v. United States of America and Carpenter Technology, Corp., et al., 162 F. Supp. 2d 656 (Ct. Int’l Trade 2001) (Viraj I). Specifically, this Court directed Commerce to: (1) articulate the reasoning behind its approach to the devaluation of the Indian rupee during the period of review; and (2) properly address and explain whether Commerce’s currency conversion methodology resulted in an accurate dumping margin and, should it be necessary, recalculate such margin as may be required.
On October 1, 2001, Commerce filed its Remand Determination with this Court, explaining why it had decided alternative means for accounting for the Indian rupee’s depreciation were unnecessary. As background, Commerce discussed two types of exchange rate fluctuations–one which it ignores, and the other which it adopts. Remand Determination at 2-3. Under the first, a spot exchange rate that deviates from the benchmark rate by more than 2.25 percent on a given day is ignored as unrepresentative of the underlying currency value because the “fluctuation” is “outside the normal range.” Id. at 2. Under the second,
where the currency is depreciating over time, and where the rate of change in the exchange rate and the overall change are such that the exchange rate movement clearly is more than just a fluctuation that can be ignored, i.e., it represents an event signaling a fundamental change in the underlying value of the currency, the spot rate on a given day (in the period of currency depreciation) is the best measure of the new foreign currency value and is therefore the appropriate exchange rate of [sic] currency conversion purposes for any sale occurring on that day. Thus, “fluctuation” in this context means “a change within the normal range.”
Id. at 2-3.
Next, Commerce distinguished the instant case from two scenarios in which currency conversion concerns caused market participants to make pricing decisions based upon anticipated future currency values. In the first scenario, hyperinflation in Brazil increased prices and costs measured in home currency units, requiring the respondent’s pricing decisions to reflect an expected future exchange rate. See Budd Co., Wheel & Brake Div. v. United States, 746 F. Supp. 1093 (Ct. Int’l Trade 1990). Commerce reasoned in the Remand Determination that its calculations in such a situation should reflect the linkage between hyperinflation, pricing decisions, and anticipated exchange rates. In the instant case, however, Commerce asserted Indian market conditions during the period of review did not make it reasonable to think–and Viraj did not claim–that Viraj had set export price on the basis of a forward exchange rate. Remand Determination at 3.
In the second scenario, comprised of two cases, the Korean won fell 40 percent over two months and the Thai baht dropped 18 percent in one day. Commerce stated that these currencies experienced such rapid and large drops in value of apparent medium- to long-term duration that market participants based their changed pricing decisions upon the most current exchange rate data available–the daily current spot exchange rate. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils From the Republic of Korea, 64 Fed. Reg. 137 (Jan. 4, 1999) (Stainless Steel from Korea) and Certain Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty Administrative Review, 64 Fed. Reg. 56,759 (Oct. 21, 1999) (Pipes and Tubes from Thailand). In contrast, Commerce stated that in this case the rupee’s gradual change made it less likely that market participants would change their pricing, thereby giving Commerce no clear basis to view the currency movement as a fluctuation that could not be ignored. Remand Determination at 3-4. Further, Viraj, as an individual market participant, provided no basis for Commerce to invoke its forward exchange rate provision. Id. at 4-5.
Commerce concluded:
In the instant case, what the Department found were typical movements that one would expect of a flexible exchange rate subject to market vagaries. There were no extraordinary aspects to the observed movement in the rupee between November 3, 1997 and November 30, 1998, and no evidence on the record to suggest that the movement was an event or signal recognized at the time by all market participants as warranting a change in their pricing behavior. For this reason, the record supports the Department’s 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. . . . Viraj’s [sic] makes an opportunistic claim for the Department to account for rupee depreciation that all agree would lower the calculated dumping margin. But Viraj’s claim is hardly distinguishable from a claim based on any of a multitude of changes in other variables that can occur after sale, but which should not be reflected in the dumping margin because they have no connection to respondent’s pricing decisions or the terms and conditions of sale.
Remand Determination at 5.
Following Commerce’s filing of its Remand Determination, Plaintiff filed a Memorandum in Opposition to the Final Results of Redetermination of the U.S. Department of Commerce (Plaintiff’s Memo). Defendant then filed a Memorandum in Opposition to Plaintiff’s Memorandum (Defendant’s Memo).
STANDARD OF REVIEW
This Court will sustain Commerce’s Remand Determination unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B). In assessing whether Commerce’s Remand Determination is in accordance with law, this Court accords substantial weight to Commerce’s interpretation of the statute it administers. See Floral Trade Council of Davis, CA v. United States, 888 F.2d 1366, 1368 (Fed. Cir. 1989). In addition, where Congress has implicitly delegated to an agency on a particular question, “a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.” Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984); see Pesquera Mares Australes LTDA v. United States, 266 F.3d 1372, 1379-82 (Fed. Cir. 2001) (applying Chevron deference to a statutory interpretation articulated by Commerce in a dumping determination). If, however, Commerce’s position is unreasonable, “deference does the agency no good.” Thai Pineapple Canning Ind. Corp. v. United States, 273 F.3d 1077, 1083 (Fed. Cir. 2001) (Thai Pineapple).
PARTIES’ CONTENTIONS
Plaintiff’s Contentions
Plaintiff first contends the Remand Determination “constitute[s] a mechanical application of exchange rates that defeats the overriding statutory goal of fair comparisons and accurate margins” because Commerce’s analysis does not address the effect that an exchange rate change after the purchase order date has upon Viraj’s actual costs and money received. (Plaintiff’s Memo at 2.) Here, Plaintiff argues, the exchange rate change resulted in Viraj actually receiving more from its customer than the actual cost to Viraj; therefore, no dumping occurred. Id.
Second, Plaintiff contends Commerce’s claims as to Viraj’s expectations are not supported by substantial evidence. Plaintiff states that because it knew the rupees received would move in tandem with its costs, it knew that it would ultimately receive more rupees from customer payments in U.S. dollars to make up for the higher rupees required to pay for imported raw materials in U.S. dollars. Id. Plaintiff argues that Commerce defeated these expectations by using the exchange rate at purchase order date to determine rupees received by Viraj, but the post-devaluation exchange rate to determine costs. Id. at 2-3.
Third, Plaintiff contends it is unclear how its expectations would be relevant, as dumping calculations are based upon actual events rather than speculation. Id. at 3.
Finally, Plaintiff contends Commerce has not adequately explained why it departed from past practice by calculating the dumping margin without using the rupees actually received. Id. at 3.