A U.S. manufacturer told the Court of International Trade on Tuesday that the U.S. Department of Commerce erroneously relied on an "unprofitable" Turkish company to calculate anti-dumping and countervailing duties for imported Chinese metal lockers.

List Industries asked the court to grant it a win in its October suit against the Commerce Department seeking to have the agency reconsider its determination that Turkish manufacturer Ayes Celikhasir VE CT was a better stand-in than Mexican producer Grupo Carso SAB de CV when it came to setting tariffs on Chinese lockers.

The government set anti-dumping duties after the U.S. International Trade Commission determined last year that subsidized and less than fair value imports of metal lockers from China were materially harming U.S. industry. When calculating tariffs for countries deemed to have anti-competitive, "nonmarket economies," such as China, the government looks to similarly situated manufacturers in countries with comparable levels of economic development.

U.S. producers calculated anti-dumping margins up to 330.8% in their petition and Commerce's final determinations came close to that amount, setting anti-dumping duties of 311.77% on Chinese producers not directly investigated in the probe.

But the Commerce Department failed to provide any analysis or explanation as it erroneously concluded that Grupo Carso's pressure vessels, large containers, steel tubing and other metallic products were not comparable enough to metal lockers, according to List's motion Tuesday.

"Commerce used that sole, erroneous conclusion to treat the remainder of its surrogate country and surrogate value determinations as a foregone conclusion," the motion says. "These failings render Commerce's primary surrogate country selection, and surrogate value determinations, contrary to law."

The government instead tapped Ayes, which produces mesh fencing and panels, wire rods and steel bars — despite its submitted financial statements containing less detail and more out-of-date information than Grupo Carso, the motion says.

While calculating surrogate financial ratios, the government erroneously credited Ayes with some 5.5 million Turkish lira ($398,000) in revenue from investments and other sources that it should not have, List said.

"Critically, when these line items — totaling over TL 5.5 million — are properly removed from Ayes's pre-tax profit of only TL 1.9 million, Ayes becomes unprofitable," the motion says, noting that would contravene "Commerce's established practice of only using the financial statements of profitable companies."

Grupo Carso's financials were all from 2020 — the operative year for the Chinese locker imports — and detailed "numerous" additional manufacturing depreciation, amortization, maintenance, security services and leasing costs that were absent from Ayes' statements, List said.

But the Commerce Department failed to consider that, because it summarily determined, based on its decision about Grupo Carso, that Mexico was not a "significant producer" of products comparable to Chinese metal lockers.

"Commerce cannot decline to undertake a comparative evaluation of the completeness and reliability of two countries' data simply because it determines one country is not a significant producer of comparable merchandise," the motion says.

Counsel for the government declined to comment Wednesday. A representative for the Department of Justice did not immediately respond to request for comment.

List is represented by Kathleen W. Cannon, Elizabeth C. Johnson and R. Alan Luberda of Kelley Drye & Warren LLP.

The government is represented by Ioana Cristei of the U.S. Department of Justice Civil Division's National Courts Section and Leslie M. Lewis of the U.S. Department of Commerce's Office of Chief Counsel for Trade Enforcement and Compliance.

The case is List Industries Inc. v. United States, case number 1:21-cv-00521, in the U.S. Court of International Trade.

Source: Law360