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Good morning, ladies and gentlemen.

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We have four argued cases and two submitted cases before the courts today.

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Argued cases are from the Court of International Trade, the District Court, the Merit Systems Protection Board, and the Patent Trial and Appeal Board.

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The submitted cases will be dealt with separately.

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The first case before the court is Jiajing Brothers.

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Uh, Bassner versus the United States.

[00:00:32] Speaker 00:
Uh, I, it's my understanding that Mr. Manegas, is that, is that how you pronounce that?

[00:00:39] Speaker 00:
Okay.

[00:00:40] Speaker 00:
That you would like to hold six minutes for rebuttal?

[00:00:43] Speaker 00:
All right.

[00:00:43] Speaker 00:
Then you have to be careful with your clock since that's a big rebuttal.

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Um, and that the government is going to cede two minutes of its time to the intervener.

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Is that right?

[00:00:53] Speaker 00:
Okay.

[00:00:54] Speaker 00:
All right.

[00:00:55] Speaker 00:
Uh, case number 151161.

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You may begin.

[00:01:03] Speaker 03:
The most important issue in this appeal is the legal requirement concerning how the Commerce Department select surrogate countries and non-market economy cases, such as the one before the court.

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Appellants submit that the Department's decision not to apply all the statutory criteria, including the significant producer criteria, to the proposed surrogate countries was contrary to law.

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only by considering all of these factors can the Commerce Department reasonably arrive at the statutorily mandated best available information for the respondent's cost of production.

[00:01:36] Speaker 02:
You're saying they didn't apply the significant producer factor to the analysis?

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I thought they concluded that Thailand and Philippines were both significant producers of comparable merchandise.

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And we would take issue with Thailand being the significant producer, but the point is they didn't apply the significant producer prong to India, which is a country that we propose.

[00:01:58] Speaker 02:
Right, but that's because India's per capita GNI was outside their bandwidths, right?

[00:02:06] Speaker 03:
Well, that's what they said, but that's not what they said in other cases, and that's not what they said recently, and that's not what they said before the court.

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What they said before the court

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which fundamentally contradicts a key holding of the lower court, which we think would merit remand on its own, is that India is not uncomparable economically to China.

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It is merely less economically comparable.

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And if it's less economically comparable, that's just a factor that needs to be weighed along with the other statutory criteria.

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The law doesn't permit them to simply exclude statutory criteria.

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But didn't commerce say that what they really said about India was that we're not excluding it completely?

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consideration we would consider it if there is no other country that ultimately could be economically comparable using all the other factors.

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That's what they said in this case but that's not what they've done in other cases and that's not what at least two CIT judges have said and possibly a third.

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We have this now before four separate judges in four separate cases below as we speak.

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is, you know, an ad hoc shrimp and Amanda Foose, the judge said, all of these criteria are important.

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The economic comparability and the evidence producer, they're in the statute.

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They have to be considered, weighed, and explained in the department's decision for the decision to be reasonable and remanded for that purpose.

[00:03:28] Speaker 02:
Those two cases, the two competing proposed surrogate countries were actually on the initial list, though, right?

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That's different from this case, where India didn't make the initial surrogate list.

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That's what the appellees maintain.

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And we would argue that that difference is not material.

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Is that wrong?

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No, it's correct.

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OK.

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But we would argue that that's not material.

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Because the court in Amanda Boots and Ad Hoc Shum said these criteria are important.

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And they are in the statute.

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So our submission is under Chevron 1.

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The department simply doesn't have the discretion to ignore some of the statutory criteria.

[00:04:05] Speaker 02:
Well, how is it that they ignored

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They're basically following the policy bill bulletin from 2004, right?

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In some respects, I mean, if this court were to hold that we actually have that policy bulletin, if you need a copy, we can... We have it.

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And I have it here in my notebook.

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If the court were to hold that they have the discretion to only consider one of the two criteria of economic comparability versus significant producer,

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then there's still an exception, even in the policy memo, where they will consider the other factors.

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And I'd like to go over that a little bit in this policy memo if I get a chance to do that.

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Go ahead.

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So we would argue that the ad hoc shrimp court felt those factors were important and they're in the statute, so they just have to be considered.

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Under significant producer, I guess this is page three of six, the title significant producer.

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commerce talks about, you look at tiers of world production.

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And if there are 10 large producers and a variety of small producers, a significant producer should be in the top 10.

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And when you look at the steel input in this case, which everyone says is the commodity steel, the commodity steel input, China is ranked number one, India is ranked number five, and Thailand is way down on the list.

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And so if you flip to the next page,

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under the exceptions to the sequencing procedure, which of course the main argument is we don't think the sequencing procedure is legal.

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At the bottom paragraph, I quote, the significant producer requirement is particularly important in these cases because the department wants to avoid selecting a surrogate country in which the relative scarcity of a major non or little traded input precludes the country from being a competitive producer of comparable merchandise.

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So when Thailand is producing 0.5% of the world's deal,

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China is number one.

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That's where my client lives and breathes and does their business.

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India is number five.

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It's totally unreasonable to stick my client with Thailand as the source of their steel.

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And we also paper the record that the Thai steel prices for this commodity were 40%, up to 40%.

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They were like in a range of 20% to 40% over the world benchmarks from established publications like the World Bank and the Indian statistics, which were domestic

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steel figures and imports figures in India as well as imports into the Philippines.

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So this is a different argument than what I saw in your briefs.

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What I saw in your briefs was you didn't like the sequential ordering of the consideration of the statutory factors.

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But then you also said you didn't think that what Thailand had made them a significant producer of comparable merchandise.

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And so you're saying even following the policy bulletin, what should have happened here is

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Commerce should have concluded there's nobody on the surrogate list who was a significant producer and then therefore should have gone back and expanded out beyond and considered listed surrogates.

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Yes, I mean, parties don't always argue off the list, although after India was removed, almost everyone was arguing off the list.

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But when a party does argue off the list, Commerce ought to be required to consider the merits of the argument.

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consider all the arguments and facts that have been placed on the record.

[00:07:25] Speaker 05:
So let's start a little bit more on the fundamental level.

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Your main complaint is that the surrogate for China historically has been India.

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And that's been commerce's choice for quite a while.

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In this case, suddenly, not the only case, but in this case, they don't pick India.

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They pick Thailand.

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Or India's not even on the list.

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That's your first complaint, isn't it?

[00:07:55] Speaker 03:
Well, there is a complaint that's grounded in the responsibility to comply with the dumping law.

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Imagine Vulcan saying... But your complaint, I understand that.

[00:08:04] Speaker 05:
But your complaint is that India did not make the list of surrogate countries.

[00:08:09] Speaker 03:
Well, yes, and much more than that.

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We've complained that, you know, commerce issues a list.

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They don't explain what the GNI ban was.

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They say these five or six countries are countries where we believe quality information can be provided.

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We have no idea how they came up with those countries.

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We're pretty sure they never did the research.

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They just basically made the countries up out of thin air within a GNI band that was never explained.

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But if I may, may I return to your question because I think it's so important that I try to make one point about what we briefed.

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In our view, you have those machines where you put the pinball at the top and it runs down all the pegs and gets to the bottom, right?

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You have two statutory criteria, economic, and production.

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You put the ball up here, and it's come down with one subset of countries.

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You put the ball up here, it's going to come with a completely different subset of countries.

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To parse the statute apart and automatically seal those criteria and come up with two different sets of countries cannot satisfy the primary statutory criteria that comes three points before that, which is they have to use the best available information for my client's cost of production.

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And if you look at it holistically and weigh the statutory criteria together, then you'll come up with one subset of countries that you can narrow down and pick the best available information.

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Which is why you don't like the sequencing, right?

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Right.

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We think the sequencing is unlawful and it's also unreasonable.

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And in every case, all these four cases that we have, they've picked countries that have tiny production of the main raw material of our client.

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And they've thrown India out, which is a massive producer of the steel products and the chemical products that are the majority of the products brought before the Court of International Trade.

[00:09:47] Speaker 00:
What about the Supreme Court's division in Euro, Jeff?

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Don't you have a problem, though, with how much flexibility that the Supreme Court seems to give commerce in this area?

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We all can see that they have a lot of discretion in the area.

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But their discretion is bounded.

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It's founded by the special terms of the NME statute, which says they must use the best available information.

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It's the only place in the trade statute that says they have to use the best available information.

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And you just talked about economic reality.

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You have to link the decision to the respondent's economic reality.

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My economic reality is I live in the biggest steel producing nation in the world.

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We produce 56% of the world's steel.

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But now you're going to stick me in Thailand that produces 0.5%.

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We're out of the market.

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We can't compete anymore.

[00:10:30] Speaker 02:
What if India's per capita GNR was one-tenth that of China?

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Well, it's certainly not the case here, but what Congress did was economically comparable.

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And so that's a factor.

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We're saying it's a factor to weigh.

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We're not saying that this court should dictate an outcome.

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We're saying this court has to order the Commerce Department to weigh all the factors.

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India's way up in terms of significant producers.

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And it's a little bit less economically comparable.

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So the Commerce Department ought to weigh that and discuss all the issues and facts that we breathe.

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That's our point.

[00:11:06] Speaker 05:
Well, in looking for a surrogate country, Commerce is looking for a comparable market economy, correct?

[00:11:11] Speaker 05:
Yes.

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I mean, that's their statutory mandate.

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Yes, of course.

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So the first thing they do is just say, let's find a surrogate for China.

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And it's traditionally been India.

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Right.

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And in this case, it's Thailand.

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Correct?

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And they used GNI as opposed to GDP.

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That's another complaint that you have.

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But when you look at commerce's methodology, it turns out that when you use GNI instead of GDP, India's off the list.

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It's not comparable anymore.

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Could it be that over time, China's market has advanced

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And India has declined, and now it's no longer a comparable market, and other countries may be, like Thailand?

[00:12:02] Speaker 03:
Well, the Commerce Department has denied that.

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I'm almost running out of time.

[00:12:06] Speaker 03:
The Commerce Department has denied that.

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That's a fundamental holding of the lower court, that India's not comparable.

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Commerce has never said that, and they corrected in their brief.

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They said it's not true.

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It's less comparable.

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And in all these other cases, when they went back to India, they said it's less comparable, but quality of data issues overcome that.

[00:12:23] Speaker 03:
And so it's not that it's less or it's not that it's not comparable, it's just less comparable.

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I'd like to try to save some time.

[00:12:29] Speaker 00:
All right.

[00:12:30] Speaker 00:
We'll give you five minutes for her bottle.

[00:12:32] Speaker 03:
Thank you, Your Honor.

[00:12:33] Speaker 00:
And we'll give an extra minute to commerce so you can decide how you want to divide it up.

[00:12:59] Speaker 00:
Can we begin with a point that your friend on the other side made that is actually somewhat troubling to me, and that is that the lower court did fundamentally decide that India wasn't economically comparable because it didn't fall within the GNI bandwidth, regardless of how you determined that.

[00:13:19] Speaker 00:
And yet, here on appeal, you all have said, well, we're not saying it's not economically comparable.

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We're just saying that it's less comparable.

[00:13:29] Speaker 00:
So how is that not inconsistent with the ruling that was below?

[00:13:34] Speaker 01:
Your Honor, as I understand what the, as we understand what the lower court said, it said that on this record, given the fact that both the Philippines and Thailand went through, satisfied the four-step sequence of the policy bulletin, on this record, India could never be considered economically comparable because it didn't satisfy the first criteria.

[00:13:59] Speaker 01:
as two countries satisfied the remaining four.

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And in our view, that's fully consistent with the position that we are taking, which is that India is less comparable on the economic criteria.

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We're not excluding, Commerce is not excluding India categorically, if this were a different product.

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And there were no countries that satisfied the four steps of the policy bulletin.

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then commerce following the bulletin would go back and essentially reconstitute the list.

[00:14:31] Speaker 01:
Again, it would rebalance the approach.

[00:14:34] Speaker 00:
Right, but you're not saying that it didn't satisfy the first step.

[00:14:39] Speaker 00:
You're saying that it didn't satisfy it as well.

[00:14:42] Speaker 00:
So what if it satisfies the other step better than the other countries that you looked at?

[00:14:48] Speaker 00:
We don't know that because you didn't do it.

[00:14:49] Speaker 01:
No, Your Honor, we are saying that it does not satisfy the first step.

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That is what we're saying.

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And because what the policy bulletin provides, the policy bulletin essentially interprets, contrary to what appellants are saying, the policy bulletin interprets a gap in the statute.

[00:15:04] Speaker 01:
The statute has two requirements.

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It requires that commerce use prices from countries that are A, at a level of economic development comparable to that of the enemy country, and B, significant producers of comparable merchandise.

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It does not say anything about

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how commerce is to satisfy those two criteria.

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That's a methodological question.

[00:15:24] Speaker 01:
The Policy Bulletin answers that methodological question by saying what we're gonna do is we are going to read the statute top to bottom.

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And the first criteria is gonna be economic comparability, and then we're gonna look at comparable merchandise, significant producer, and then finally data quality.

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That is a gap in the statute.

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That is something that the Policy Bulletin fills, and that's consistent with what commerce does.

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in other instances when a statute provides criteria, but does not tell commerce how it is dissatisfied.

[00:15:53] Speaker 00:
Okay, what about now the fact that even if you say you can take those steps separately and you can take, say, what's economically comparable from getting about whether they produce a sufficient amount of the product, how do you establish that GNI band?

[00:16:12] Speaker 00:
even under Eurodiff, the court said, well, if they don't explain themselves, then that could be arbitrary and capricious.

[00:16:19] Speaker 00:
Alternatively, we could find that there isn't substantial evidence to support the conclusion on economic comparability.

[00:16:25] Speaker 00:
Why do we draw a line here as opposed to here, especially when there doesn't seem to be much debate that commerce draws a line differently in every case?

[00:16:36] Speaker 01:
I have two answers to that, Your Honor.

[00:16:38] Speaker 01:
The first answer is that this is the type of issue that this court need not consider in this appeal because the appellant did not raise it before commerce and did not raise it at the trial court.

[00:16:49] Speaker 01:
Just as they did not challenge the facial application of the sequential criteria, they did not challenge before the trial court or before commerce

[00:16:57] Speaker 01:
the actual ban that Commerce selected.

[00:16:59] Speaker 01:
They just said India should have been included in the ban.

[00:17:02] Speaker 00:
It's kind of hard to say.

[00:17:03] Speaker 00:
I mean, I saw that argument in your brief, but it's kind of hard to say that it's not subsumed within their argument when their argument is India shouldn't have been left off the list.

[00:17:12] Speaker 00:
How does that not directly implicate where the ban cuts off?

[00:17:18] Speaker 01:
Because what they argued is, in their submissions, they argued that

[00:17:23] Speaker 01:
Yes, India should be included.

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India is a significant enough producer.

[00:17:30] Speaker 01:
And GNI is the wrong measure.

[00:17:32] Speaker 01:
You should use things other than GNI.

[00:17:34] Speaker 01:
That was their primary argument.

[00:17:35] Speaker 00:
So what's your response to the merits?

[00:17:38] Speaker 01:
The merits of the argument, well, if I may for one second just return to the first point.

[00:17:43] Speaker 01:
It's important that they did not raise this because they deprived commerce of an opportunity to actually explain how commerce drew the band.

[00:17:52] Speaker 01:
That's why the court does not have a record.

[00:17:55] Speaker 01:
That's why the trial court didn't have a record.

[00:17:57] Speaker 01:
And this issue wasn't presented before the trial court.

[00:17:59] Speaker 01:
That's why this court doesn't have a record to evaluate this argument.

[00:18:02] Speaker 01:
And the exhaustion requirement recognizes that in such circumstances, it would be inappropriate for a court to reach that issue.

[00:18:10] Speaker 01:
But if the court were to reach that issue, it would essentially have to consider the evidence that commerce did present.

[00:18:16] Speaker 01:
And I think the ban that commerce selected

[00:18:20] Speaker 01:
fairly self-explanatory.

[00:18:22] Speaker 01:
Commerce basically went 50% above China's GNI and 50% below China's GNI.

[00:18:29] Speaker 01:
So China's GNI was 4,000, per capita GNI was $4,260.

[00:18:37] Speaker 01:
Commerce used a range of $2,000 and $6,000.

[00:18:42] Speaker 02:
Is there a reason why they chose 50% of per capita GNI?

[00:18:48] Speaker 01:
Well, they didn't have an opportunity to, they weren't challenged on that selection.

[00:18:53] Speaker 01:
They did not.

[00:18:54] Speaker 02:
But commerce has to go through some kind of conscious thought process, right?

[00:18:58] Speaker 02:
And that's what we're just trying to find out with you right now and explore with you.

[00:19:03] Speaker 02:
What was the conscious thought process in picking these numbers?

[00:19:07] Speaker 01:
I think commerce felt that a 50% up and down band provides a wide enough margin.

[00:19:15] Speaker 01:
Could they have picked a different margin?

[00:19:17] Speaker 01:
Could they have picked 25%, 75% probably?

[00:19:20] Speaker 01:
But it's fact specific, and it's not meant to be exhaustive.

[00:19:25] Speaker 01:
It's meant to be a starting.

[00:19:27] Speaker 01:
And I think that's the other fundamental point here, that in following the policy bulletin, the policy bulletin says, commerce will essentially select these countries, follow the four steps, select these countries as the starting point, and then give parties opportunities to comment, and then evaluate things.

[00:19:42] Speaker 01:
And that's exactly what commerce did here.

[00:19:44] Speaker 01:
issued the surrogate value country selection memo very early in the process.

[00:19:50] Speaker 02:
Is it true that the bandwidth sweeps in several dozen countries that fall within that per capita GNI bandwidth?

[00:19:57] Speaker 01:
In this case, Your Honor, I don't know that the record reflects how many countries were swept in.

[00:20:02] Speaker 02:
It wasn't just those seven countries that were identified that happened to fall within that particular bandwidth.

[00:20:10] Speaker 02:
Is that fair to say?

[00:20:11] Speaker 01:
Your Honor, I think that is fair.

[00:20:13] Speaker 01:
I think the seven countries that were identified were ones that were also, that also satisfied the other criteria.

[00:20:19] Speaker 01:
So the initial step, the initial cutoff of GNI could have included more countries.

[00:20:25] Speaker 02:
So you're saying those seven countries that were identified inside that family, I'm just trying to understand how this works.

[00:20:32] Speaker 02:
Were countries that Congress, I mean not commerce, commerce selected because

[00:20:38] Speaker 02:
It knew ahead of time that they were also the countries within that bandwidth that are significant producers of comparable merchandise.

[00:20:48] Speaker 01:
I have to correct what I said earlier, Your Honor.

[00:20:50] Speaker 01:
I apologize.

[00:20:51] Speaker 01:
Commerce selected those countries because this can be found at JA-29.

[00:20:55] Speaker 01:
It says that the list of countries that it selected provides the countries that are economically comparable to China and most likely to have good data availability and quality.

[00:21:05] Speaker 01:
So essentially they were looking at

[00:21:07] Speaker 01:
at the first step and also the demonstrated, the likelihood that these countries are going to satisfy the last prong as well.

[00:21:16] Speaker 01:
And it's then the middle steps that were evaluated afterwards.

[00:21:23] Speaker 02:
Why is Thailand a significant producer here when they only make a fraction of a percent of the world's heel pods?

[00:21:38] Speaker 01:
I wish I could point to something in the record that says that, but that's another argument that Brother didn't make before commerce or before the trial court.

[00:21:46] Speaker 01:
The fact that Thailand was selected as a significant producer was never contested.

[00:21:52] Speaker 01:
Now, as to the merits of the question, why Thailand could be a significant producer.

[00:21:58] Speaker 02:
You're saying Brother never made an argument that India should be selected because it is a far more significant producer of this kind of merchandise than

[00:22:07] Speaker 02:
than any of the other countries that you're considering?

[00:22:10] Speaker 01:
No, it made that argument, Your Honor.

[00:22:11] Speaker 01:
But it made the argument that India is a much more significant producer.

[00:22:15] Speaker 01:
It absolutely did.

[00:22:17] Speaker 01:
What it did not argue, though, is that Thailand was not a significant producer and should be excluded on that basis.

[00:22:26] Speaker 00:
Well, I mean, that's sort of the flip side.

[00:22:29] Speaker 00:
They pretty much argued that all of the other countries weren't significant producers when compared to India.

[00:22:35] Speaker 01:
That's true, Your Honor, and commerce's rejoinder to that goes back to the notion that India doesn't satisfy the first prong, which is why, again, I think it's significant that Brother did not raise the kind of facial legal challenge to the policy bulletin that they're presenting now.

[00:22:53] Speaker 01:
They did not give commerce an opportunity to say, why did you select this ban?

[00:23:00] Speaker 01:
Why is the following the statutory criteria top to bottom as it's written

[00:23:05] Speaker 01:
a proper interpretation of the statute.

[00:23:07] Speaker 01:
They've come in to this court arguing those things for the first time, pointing to gaps in the record or what they think are gaps in the record and gaps in commerce's explanation, but commerce wasn't confronted with those arguments.

[00:23:21] Speaker 02:
Are you saying commerce didn't ever make a finding that Thailand is a significant producer of this merchandise?

[00:23:27] Speaker 01:
It absolutely made a finding.

[00:23:28] Speaker 02:
Okay, so what commerce's best answer for supporting the finding that Thailand is indeed

[00:23:34] Speaker 02:
significant producer?

[00:23:39] Speaker 01:
Your Honor, off the top of my head, I cannot cite the data that Commerce relied upon, but it found that the quantity of exports from Thailand was sufficient for it to constitute a significant producer.

[00:23:53] Speaker 01:
And I think to analyze the significant producer question, we can again look to the Policy Bulletin, which suggests that significant producer is not

[00:24:04] Speaker 01:
some sort of inflexible top five countries.

[00:24:06] Speaker 01:
I mean, it explicitly says a significant producer is not limited to the top five producers of a merchandise.

[00:24:14] Speaker 01:
It looks to significant commercial quantities.

[00:24:17] Speaker 01:
It looks to all sorts of factors.

[00:24:21] Speaker 01:
On page, I believe it is four, three and four, where it discusses significant producer commerce, the policy bulletin contains three paragraphs.

[00:24:31] Speaker 02:
that explain all the various ways in which a significant producer can be... There's no one way to get there, but there has to be, ultimately, a reasoned explanation for why you got there, in this case, with respect to Thailand.

[00:24:45] Speaker 01:
And there is, Your Honor.

[00:24:46] Speaker 01:
That explanation was presented in the IND memo at J8 1387-88, where Commerce explained his finding that Thailand

[00:25:00] Speaker 01:
was a significant producer and it's cited in the footnotes the record evidence on which it relied to make that finding.

[00:25:11] Speaker 00:
Where on 1388?

[00:25:20] Speaker 01:
It goes from 1387 to 1388.

[00:25:23] Speaker 01:
The sentence that

[00:25:28] Speaker 01:
In addition, we find that both Thailand and the Philippines are significant producers of comparable merchandise.

[00:25:33] Speaker 01:
Specifically, certain steel threaded rods are currently classified under the Harmonized Tariff Schedule.

[00:25:39] Speaker 01:
The sentence continues, during the POR, Thailand and the Philippines exported significant quantities of merchandise within the category 7318.15.

[00:25:46] Speaker 00:
Which was only one of the many categories that were at issue in the period of review, right?

[00:25:54] Speaker 01:
It is one of the various categories, Your Honor.

[00:25:58] Speaker 00:
So in other words, there's all these different kinds of steel that we're talking about, or spread of steel rods that we're talking about, and they basically land that just because they produce one of them, they're therefore a significant producer of comparable merchandise.

[00:26:13] Speaker 01:
Yes, Your Honor, comparable merchandise does not require that a country produces the full range of merchandise that a

[00:26:22] Speaker 01:
that an investigative company that a respondent produces.

[00:26:26] Speaker 05:
How does the material hydrochloric acid get into this particular question, significant producing?

[00:26:33] Speaker 01:
I think it does, as Commerce explained in its remand, it doesn't weigh very heavily at all because the primary input here is steel, as Commerce explained in the remand.

[00:26:43] Speaker 01:
And the tie data was much more specific on the steel input than the Philippine data.

[00:26:51] Speaker 01:
It was, again, we've now put India aside.

[00:26:54] Speaker 01:
The Thai data was broken into grades of steel that could be matched to the specific carbon content that Brother reported in its input.

[00:27:02] Speaker 01:
And because steel accounted for more than two-thirds of the normal value of the subject merchandise, Commerce determined that all the other factors

[00:27:16] Speaker 01:
the financial statements, which, as it found, were equivalent between Thailand and the Philippines.

[00:27:21] Speaker 05:
So Commerce found that there was sufficient data on which to build the cost factors, correct?

[00:27:27] Speaker 01:
That's right, yes.

[00:27:28] Speaker 01:
It found that there was sufficient data in Thailand and that any weaknesses in the Thailand data compared to the Philippine data was vastly outweighed by the specificity.

[00:27:39] Speaker 05:
What I'm troubled about is the data that they picked are from the financial records of

[00:27:45] Speaker 05:
But CNN is not a producer.

[00:27:48] Speaker 05:
It's an investment company.

[00:27:50] Speaker 05:
It's got a subsidiary.

[00:27:51] Speaker 05:
And this court, the court has before rejected the CNN financials in another case.

[00:27:58] Speaker 05:
But in this case, Commerce said, no, those financials are okay.

[00:28:03] Speaker 05:
How do you justify that?

[00:28:05] Speaker 01:
Commerce explained this discrepancy, Your Honor, in its remand determination.

[00:28:09] Speaker 01:
And the trial court below explained it in its opinion, sustaining that remand.

[00:28:15] Speaker 01:
The proceeding in which CEN was rejected as a source of surrogate financial statements was the wire hangers proceeding.

[00:28:27] Speaker 01:
As Congress explained, wire hangers are produced from somewhat different inputs and have different manufacturing processes.

[00:28:35] Speaker 01:
In particular, the threaded rod that's at issue in this investigation is produced from both wire rod and round bar.

[00:28:42] Speaker 01:
It's round bar that is not

[00:28:44] Speaker 01:
that is not comparable, that is not involved in the wire hangers production, and it's wire rod that is the comparable merchandise to that which CEN's subsidiary produces.

[00:28:57] Speaker 01:
So in other words, CEN's subsidiary produces pre-stressed concrete wire which Commerce previously found to be comparable merchandise.

[00:29:07] Speaker 05:
Why don't you use a GS&A for the parent?

[00:29:11] Speaker 05:
when it's a subsidiary that's producing the steel.

[00:29:18] Speaker 01:
I'm not sure I understand the question, Your Honor.

[00:29:20] Speaker 05:
So the data that was looked at was the general seller administrative expenses.

[00:29:24] Speaker 01:
Yes, Your Honor.

[00:29:25] Speaker 05:
CNN's data.

[00:29:26] Speaker 05:
But they looked at the parent.

[00:29:29] Speaker 05:
Or did they focus on the subsidiary?

[00:29:33] Speaker 01:
I believe they looked at both, Your Honor.

[00:29:36] Speaker 01:
They looked at the parent.

[00:29:39] Speaker 01:
The statement was reported for that of the parent and the subsidiary.

[00:29:43] Speaker 01:
I believe they considered both.

[00:29:46] Speaker 01:
I am afraid I can't be more specific.

[00:29:48] Speaker 01:
I apologize.

[00:29:49] Speaker 00:
If we're going to reserve two minutes for your other counsel, I think we should do that.

[00:29:55] Speaker 01:
Thank you, Your Honor.

[00:30:00] Speaker 04:
Good morning.

[00:30:00] Speaker 04:
May it please the Court?

[00:30:02] Speaker 04:
I'm Fred Wade on behalf of Defending Intervenor Balkan Threaded Products.

[00:30:07] Speaker 04:
I would like to address five points very quickly.

[00:30:09] Speaker 04:
which respond to, I believe, the questions that your honors have been asking of both parties this morning.

[00:30:16] Speaker 04:
First of all, the standard is not producer of steel.

[00:30:21] Speaker 04:
The standard for a significant producer is of comparable merchandise.

[00:30:25] Speaker 04:
That's right from the statute.

[00:30:27] Speaker 04:
India may produce a lot of steel.

[00:30:29] Speaker 04:
The Commerce Department wasn't considering that.

[00:30:31] Speaker 04:
It was considering which countries produced the particular steel product, the comparable steel product,

[00:30:39] Speaker 04:
to the threaded rod that was produced by Brother.

[00:30:43] Speaker 04:
It looked at import data, I'm sorry, it looked at GTA export data of the seven countries who were listed on the Office of Policy's memorandum, and it found that Thailand was a significant producer of those, of that conflict product.

[00:31:05] Speaker 00:
I mean, it didn't seem to be much of a producer at all.

[00:31:08] Speaker 04:
Well, it is, Your Honor.

[00:31:09] Speaker 04:
When, when counsel was talking about .5% of world production, he was talking about all steel, plate, pipes, rebar, cold rolled, huge tonnages.

[00:31:22] Speaker 04:
Threaded rod is a relatively small product in terms of tonnage on the world basis.

[00:31:28] Speaker 04:
And that's what the Commerce Department was mandated to look for in the statute.

[00:31:33] Speaker 04:
Comparable merchandise.

[00:31:35] Speaker 04:
not the whole family of steel, but the particular subset of steel products.

[00:31:41] Speaker 04:
And the Commerce Department did that and found that Thailand and the Philippines were substantial producers of that product.

[00:31:47] Speaker 04:
And Your Honor, you asked... Because why?

[00:31:50] Speaker 04:
I'm sorry?

[00:31:50] Speaker 04:
Because why?

[00:31:51] Speaker 04:
Because it had the tonnage numbers on the export data and it compared it to seven and it saw that those numbers were, in the Commerce Department's judgment, significant.

[00:32:01] Speaker 04:
Does it say that somewhere?

[00:32:03] Speaker 04:
Yes, it does.

[00:32:04] Speaker 04:
I think the Council for the Government referred to the issues in the decision amendment where it said specifically that.

[00:32:10] Speaker 00:
It says it's significant, but it doesn't say why.

[00:32:12] Speaker 04:
It concluded.

[00:32:14] Speaker 00:
There's no explanation.

[00:32:15] Speaker 00:
There's not even detail as to comparing numbers to other countries.

[00:32:21] Speaker 04:
That's correct, Your Honor, although those numbers are in the record.

[00:32:25] Speaker 04:
Your Honor, Judge O'Malley, you asked about the harmonized tariff number that was used.

[00:32:31] Speaker 04:
The harmonized tariff number that was used included all of the numbers that you saw.

[00:32:36] Speaker 04:
The harmonized tariff number that was used was 7318.15, which is a major category.

[00:32:43] Speaker 04:
Within that are 7318.15.5051.5056.50.9 and

[00:32:58] Speaker 04:
So all of those HTS numbers were subsumed in the number the Commerce Department looked at.

[00:33:04] Speaker 04:
It wasn't looking at one of four, it was looking at the parent, if you will, of the four.

[00:33:10] Speaker 04:
Now turning to the financial statement for CEN that Judge Raina mentioned, that it's an important audit producer.

[00:33:19] Speaker 04:
That's not correct, Your Honor.

[00:33:21] Speaker 04:
The record shows that CEN is a major producer.

[00:33:25] Speaker 04:
of subject merchandise, that is, pre-stressed concrete wire, which the Commerce Department has held, is comparable to steel threaded rod.

[00:33:33] Speaker 04:
Indeed, the CEN financial statement on the record shows that during the period of the financial review, almost 50% of the revenue of CEN was generated by... Are you talking about CEN or a subsidiary?

[00:33:50] Speaker 04:
It's a subsidiary of CEN, but there were four subsidiaries.

[00:33:53] Speaker 04:
And the reason why it didn't look at a separate financial statement is because there was only a consolidated financial statement for the parent.

[00:34:01] Speaker 05:
In this case, it was not a consolidated statement.

[00:34:05] Speaker 05:
It had data on all the different subsidiaries.

[00:34:08] Speaker 04:
No, it was a consolidated statement, but it had information about the individual segments.

[00:34:13] Speaker 04:
It just didn't have separate financial statements on a segment-by-segment basis.

[00:34:18] Speaker 04:
But the consolidated statement showed that 50% of its revenue was generated by the wire section

[00:34:23] Speaker 04:
less than 10% in the all other category, which includes investment.

[00:34:29] Speaker 04:
So if you look at that, it's quite clear that CEN is a major producer.

[00:34:32] Speaker 00:
Do you have a last point you want to make?

[00:34:34] Speaker 04:
Well, I have three, but I'll limit it to one.

[00:34:37] Speaker 04:
And that is the best information available standard, simply to clear something up.

[00:34:42] Speaker 04:
The best information available standard in the statute states the valuation of the factors of production shall be based on the best information available

[00:34:50] Speaker 04:
regarding the values of factors in the market economy, country, or country.

[00:34:54] Speaker 04:
That's where the Brother stops its quote.

[00:34:57] Speaker 04:
The remainder of that statutory language is considered to be appropriate by the administering authority, which is the Commerce Department, which clearly Congress meant to give very broad discretion to Commerce to interpret the statute.

[00:35:11] Speaker 04:
Thank you, Your Honors.

[00:35:12] Speaker 00:
Thank you.

[00:35:13] Speaker 00:
We'll give you your full six minutes, because we went over.

[00:35:17] Speaker 03:
Yes.

[00:35:17] Speaker 03:
Returns, enough to say.

[00:35:21] Speaker 03:
may I please support, maybe to return to the significant producer to clear that up because it was very important to judge him.

[00:35:29] Speaker 03:
In the joint appendix, you may note for further consideration, JA37 is our submission and JA78 was the comparison, I believe, from the petitioners.

[00:35:43] Speaker 03:
And what we did is we put in the fasteners category, world exports from India, which are huge.

[00:35:49] Speaker 03:
They put in

[00:35:50] Speaker 03:
imports into the United States, not world exports of anything.

[00:35:54] Speaker 03:
And so our record shows that India is a massively significant producer of the comparable merchandise, and their data shows nothing.

[00:36:02] Speaker 03:
So Judge Chen, you were correct earlier where the Commerce Department has never justified how they picked a significant producer in this case.

[00:36:11] Speaker 03:
Now, we would argue that the policy bulletin is not merely gap-filling, but it contradicts the statute.

[00:36:17] Speaker 03:
The statute has the two criteria that there is.

[00:36:21] Speaker 03:
protests that we didn't preserve this argument about whether Thailand was... We made this argument in the context of the quality and availability of data, which is one of their policy bulletin points that nobody in this court disputes.

[00:36:35] Speaker 03:
It's something they should consider, because how do they get to the best of the information without considering the quality and availability of data?

[00:36:41] Speaker 03:
So we were absolutely flabbergasted when India was left off the list, and we presented all this data and argumentation specifically to prove that India had better quality and availability of data

[00:36:50] Speaker 03:
and was a much better suited country.

[00:36:53] Speaker 03:
We also proposed three or four financial statements of fastener companies from India.

[00:36:58] Speaker 03:
On the other hand, Thailand had a company that says on both the financial statements in Hangers and in Silderay Rug.

[00:37:04] Speaker 03:
We are primarily an investment company.

[00:37:06] Speaker 02:
To get to the fight about who is the better, significant producer of this merchandise, you first have to cross the threshold of being on the GNI list.

[00:37:19] Speaker 03:
we would respectfully disagree.

[00:37:21] Speaker 03:
I think it's arbitrary and capricious to have a very narrow definition of GNI ban and a very wide definition of significant exporter.

[00:37:28] Speaker 03:
Even after losing Shandong Rongxin, where the court said you can't say one kilogram of export equals significant production, commerce still maintains that any evidence of any production exports at all makes all the countries on the list significant producers.

[00:37:43] Speaker 03:
That's just illegal, and we hope the court won't stand for that.

[00:37:46] Speaker 03:
And in our brief, at page 29, we cited the fish blade case that says there are typically 40 to 50 countries in the band.

[00:37:53] Speaker 03:
That was another one of your questions.

[00:37:55] Speaker 03:
So how did they pick the six?

[00:37:56] Speaker 03:
Where did they do this mysterious research to say those six countries had available data?

[00:38:00] Speaker 03:
We came with a mountain of data from India showing that India was in place with the best quality and availability of data.

[00:38:06] Speaker 05:
Didn't they first start by looking at a comparable economy?

[00:38:10] Speaker 05:
I mean, that's first step, isn't it?

[00:38:11] Speaker 05:
I mean, looking for surrogate values, looking for a comparable economy.

[00:38:15] Speaker 03:
The statute says and, and significant producer.

[00:38:18] Speaker 05:
I know, but first it says comparable economy.

[00:38:20] Speaker 03:
That's the first step, and what we're saying is don't apply one standard to the first step.

[00:38:24] Speaker 05:
Excuse me.

[00:38:25] Speaker 05:
In this case, they used GNI and they found that these seven countries had comparable economies, and India was not within that band.

[00:38:35] Speaker 03:
Initially correct.

[00:38:36] Speaker 03:
Okay.

[00:38:37] Speaker 03:
But it doesn't mean it wasn't economically comparable, just less so.

[00:38:41] Speaker 03:
We cited in our reply brief where the government conceded that, but then they stopped the analysis.

[00:38:46] Speaker 03:
They should have analyzed all the factors.

[00:38:48] Speaker 03:
So if I could maybe very quickly summarize our most important argument is that first, the statute requires them to consider the two criteria.

[00:38:57] Speaker 03:
Second, no matter what, they have to apply reasonable standards to each criteria and not have a narrow definition of GNI and a wide definition of significant producer.

[00:39:07] Speaker 03:
Third, we're arguing that the exception in the policy bulletin for quality and availability of data applies here.

[00:39:13] Speaker 03:
It's true that the Indian fifth ranking in the world applies to all steel, but then it's reasonable to say that they're also a very large producer of steel wire rod.

[00:39:21] Speaker 03:
It's just reasonable to assume if they're fifth in the world in everything, they're going to be much larger and have a much better supply.

[00:39:28] Speaker 03:
What the Commerce Department did in this case is told us to go out to the desert to make ice cream.

[00:39:33] Speaker 03:
I mean, it's absolutely ridiculous.

[00:39:35] Speaker 05:
When you first argued before us, you were arguing worldwide steel production on India.

[00:39:43] Speaker 05:
Those are the numbers you argued before us.

[00:39:45] Speaker 05:
So now you'd like for us to look at the steel production data for comparable merchandise.

[00:39:51] Speaker 03:
That goes to call the availability of data, but we also put at JA0037 India's exports of comparable merchandise.

[00:39:58] Speaker 03:
We had the four financial statements from India.

[00:40:01] Speaker 03:
They had an investment company.

[00:40:02] Speaker 03:
And so I maybe make one final point about why the lower court's decision should be overturned.

[00:40:07] Speaker 03:
One, the court got it fundamentally wrong that India was not comparable at all.

[00:40:11] Speaker 03:
Two, the court ignored our arguments that the Sen company in Thailand had counter-available subsidies on it.

[00:40:17] Speaker 03:
And under commerce practice, that's a deal breaker.

[00:40:20] Speaker 03:
They just throw out the statement.

[00:40:21] Speaker 03:
If they have reason to believe or suspect under the congressional legislative intent, they throw out a statement.

[00:40:27] Speaker 03:
And so that was completely ignored.

[00:40:28] Speaker 03:
You won't find that in the court's opinion.

[00:40:30] Speaker 03:
Third, the court failed to address at all our argument that the Thai seal is 40% over the world benchmark in the Indian crisis and the Philippine crisis.

[00:40:38] Speaker 03:
For raw material commodity, they say it can get everywhere.

[00:40:41] Speaker 03:
It should set alarm bulbs off that it's 40% higher, or even 20% higher than the world price.

[00:40:46] Speaker 03:
Those three points, the judge either got wrong or completely ignored.

[00:40:50] Speaker 03:
And for that reason alone, this case should be remanded.

[00:40:52] Speaker 03:
But we hope the court also insists, just like in ad hoc shrimp and Amanda Foods, that the government address all the statutory factors

[00:41:00] Speaker 03:
to the best available information.

[00:41:02] Speaker 03:
And if there are no further questions, I'll address them.