[00:00:05] Speaker 02: Okay. [00:00:06] Speaker 02: The first argued case this morning is the first of the Apex frozen foods against the United States cases, number 15, 2085. [00:00:16] Speaker 02: Mr. LaFraci. [00:00:35] Speaker 04: Good morning. [00:00:36] Speaker 04: You may please the court. [00:00:37] Speaker 04: Again, for the record, my name is Robert LaFranc, the law firm of Crowell and Mooring, appearing today on behalf of Plaintiff's Appellants Apex et al. [00:00:45] Speaker 04: Your Honours, the Commerce Department unlawfully applied its targeted dumping methodology in this case. [00:00:50] Speaker 04: Now, we raised several issues in our brief about this, but I'd like to focus today on one issue in particular, [00:00:55] Speaker 04: And that is the Commerce Department's unlawful use of zeroing as part of its threshold meaningful difference analysis. [00:01:01] Speaker 04: I know the court has dealt with zeroing many times in the past, but that has been in a different context, which is mostly in the context of the margin calculation. [00:01:09] Speaker 04: What we're talking about here primarily is the use of zeroing earlier as a threshold determination to see whether they can use zeroing later as part of the calculation. [00:01:18] Speaker 02: So is the issue of the use of zeroing the fundamental issue? [00:01:24] Speaker 04: That is one of the fundamental issues in terms of part of the meaningful difference test. [00:01:29] Speaker 04: So zeroing is used twice. [00:01:31] Speaker 04: The Commerce Department is using it as a threshold determination as part of its targeted dumping analysis to determine [00:01:38] Speaker 04: which methodology to employ, the alternative methodology, A to T with zeroing, or its normal methodology, A to A without zeroing. [00:01:47] Speaker 04: So one of the arguments we're making is that it's fundamentally unfair, it's unreasonable, it's arbitrary, and it's contrary to the statute upon which they rely. [00:01:55] Speaker 04: To use zeroing as part of a threshold determination to decide later whether to use zeroing. [00:02:01] Speaker 04: We have argued that not only is it contrary to the language of the statute, which talks about [00:02:06] Speaker 04: the analysis being that you must account for price differences. [00:02:09] Speaker 04: So you must account for differences in prices before employing the alternative remedy. [00:02:15] Speaker 04: However, what the Commerce Department is doing is simply accounting for zeroing differences between the two methodologies. [00:02:21] Speaker 04: That then allows them to use the alternative methodology with zeroing as part of the margin calculation. [00:02:28] Speaker 04: Now, we have never disputed that the Commerce Department may use zeroing once lawfully deployed as part of its calculation. [00:02:35] Speaker 04: What we have said is they can't use zeroing the way they're using it in an uneven manner as part of their threshold calculation. [00:02:43] Speaker 04: So what they're doing is to determine fundamentally. [00:02:47] Speaker 05: Using it in an uneven manner or using it at all? [00:02:51] Speaker 04: using it in an uneven manner, Your Honours. [00:02:54] Speaker 05: Why don't you explain why that's so? [00:02:56] Speaker 05: What is the nature of the uneven application? [00:02:59] Speaker 04: The uneven application is then when they do their meaningful difference analysis, which is a first phase of their targeted dumping analysis, to decide whether they can use their alternative methodology. [00:03:11] Speaker 04: They compare the normal calculation, which is the average to average methodology, without zeroing, [00:03:19] Speaker 04: They run the calculation, they run the margin without zeroing, which means they use offsets. [00:03:24] Speaker 04: They then get a result, which in this case was zero when they compare it to when they run the calculation on all sales. [00:03:31] Speaker 04: They then run the alternative calculation, which is their A to T methodology, which is what they're trying to use if there's targeted dumping. [00:03:39] Speaker 04: And they use zeroing. [00:03:41] Speaker 04: And by doing that, it inflates the margin. [00:03:43] Speaker 05: There will always be a material difference when they do it that way. [00:03:46] Speaker 04: Absolutely. [00:03:46] Speaker 04: We think there's material. [00:03:47] Speaker 04: So what's wrong with it? [00:03:48] Speaker 04: Well, what's wrong with it is, first of all, we think it's... It does show a material difference. [00:03:53] Speaker 04: It shows a material difference, but it's other than a situation where every sales don't... Why are they looking for a material difference in the first place? [00:04:01] Speaker 04: Well, they're looking to... Well, that's a good question, actually. [00:04:03] Speaker 04: What they're trying to find is they're trying to find whether the methodology accounts for significant price differences. [00:04:10] Speaker 04: And that's where we think they're going wrong. [00:04:12] Speaker 04: What this methodology is doing is it's simply accounting for zeroing differences. [00:04:16] Speaker 05: It's not accounting for whether the difference in the margin is attributed to... Whether the methodology accounts for the differences or whether the marketplace accounts for the differences. [00:04:26] Speaker 04: Well, the courts have held that what's happening in the marketplace in terms of the reasons for price differences are not relevant to the analysis. [00:04:32] Speaker 05: So I think what the Commerce Department is determining is whether their methodology... This is the testing... Isn't the case in this particular case, in both of the two cases, the so-called pattern that they were looking at, whether it was by purchasers or by region or by timing, showed a disparity in prices. [00:04:52] Speaker 05: Some would be above the home market price, some below. [00:04:56] Speaker 05: Isn't that what was being shown in that pattern they looked at here? [00:05:01] Speaker 04: No, the pattern analysis is what they're doing is looking at the comparison of prices only on the U.S. [00:05:07] Speaker 04: market to determine whether there's a disparity of prices. [00:05:11] Speaker 05: So they see a disparity. [00:05:12] Speaker 04: That's correct. [00:05:14] Speaker 05: But what... And isn't when the statute says one of these differences cannot be taken into account, what commerce is trying to decide is whether or not that pattern of prices deserve a countervailing duty? [00:05:28] Speaker 04: Yes or no? [00:05:29] Speaker 04: Well, in this case, it needs a dumping duty. [00:05:30] Speaker 04: That's correct. [00:05:31] Speaker 05: That's when they say cannot be taken into account using a method. [00:05:36] Speaker 04: That's correct, although it's a two-part analysis. [00:05:39] Speaker 05: So the statute is then saying, well, then you don't know if you apply A to A, you may not get the right answer as to whether or not this pattern deserves a countervailing duty. [00:05:52] Speaker 04: Well, again, in this case, it's an anti-dumping duty. [00:05:56] Speaker 04: But it's a two-part analysis. [00:05:59] Speaker 05: So first, the... How are you going to know whether or not that pattern deserves an anti-nothing duty unless you can measure the domestic prices against the home market prices? [00:06:09] Speaker 04: Well, that's the ultimate calculation. [00:06:11] Speaker 05: But at this part, we're in the threshold determination where they're trying to determine... What they're trying to determine is... But it isn't in the in-game commerce's duty to decide whether or not the pattern that knows differences [00:06:24] Speaker 05: if you use a method, whether that answers the question of whether or not this pattern deserves an ending duty. [00:06:32] Speaker 04: Yes, that's the ultimate end game here. [00:06:34] Speaker 04: So first they have to decide whether there's a pattern and whether it's significant. [00:06:37] Speaker 04: That's one calculation. [00:06:39] Speaker 04: We're not disputing that part of the calculation. [00:06:41] Speaker 04: It's the next part to determine what, if, as the staff. [00:06:44] Speaker 05: But if you used A to A, and A to A suggested you didn't need to have a duty, but the actual sales were ones in which there was a large number of sales in the US market that were below the home market price. [00:06:57] Speaker 05: The higher sales in the home market would allow, in this market, would allow you to mask the ones that deserved a hand in dumping duty. [00:07:06] Speaker 04: Well, and that's right, that's what the analysis should be. [00:07:09] Speaker 04: Whether, that's precisely the point, right? [00:07:11] Speaker 05: Whether that pattern of prices... But why isn't the methodology Commerce using answering that question? [00:07:16] Speaker 04: It's not answering that question because it's not actually getting to whether there's masking going on. [00:07:21] Speaker 04: There's just an explicit, explicit assumption that there's masking going on. [00:07:25] Speaker 04: All they're doing is taking two methodologies, running the calculation, and comparing them. [00:07:30] Speaker 05: What methodology would you use to find out whether masking was actually happening? [00:07:34] Speaker 04: methodology we would use is we don't have a problem with them using the meaningful difference test. [00:07:39] Speaker 04: We haven't challenged that. [00:07:40] Speaker 04: That's the test they've come up with. [00:07:42] Speaker 04: The test that they have devised is [00:07:44] Speaker 04: To determine whether to use the alternative methodology, they calculate margins alternatively under A to A, which is the way they normally do it, and then under A to T. And they decide if there's a meaningful difference between those two margins as they calculate it, which they define as either going from below de minimis to above de minimis, which is what happened here. [00:08:05] Speaker 04: then they will then decide that their normal methodology cannot take account of those price differences and then they apply the alternative methodology. [00:08:16] Speaker 04: So we don't necessarily have a problem with that methodology. [00:08:20] Speaker 04: What we have a problem with is when they do the comparison, they're zeroing only on the A to T comparison and not on the A to A comparison. [00:08:28] Speaker 04: So what they're doing is they're allowing offsets on the A to A comparison, which means [00:08:34] Speaker 04: Any time there is a non-dumped sale, which has a negative margin, that will reduce the positive dumping margin. [00:08:45] Speaker 05: How do you zero in an A to A calculation? [00:08:50] Speaker 05: You're suggesting they should do zeroing in an A to A? [00:08:54] Speaker 05: I'm suggesting that they should do zeroing in the A to A as well. [00:08:56] Speaker 05: How do you do that? [00:08:57] Speaker 05: I'm not smart enough to understand how you would do that. [00:09:00] Speaker 04: Well, they've done it for years. [00:09:02] Speaker 04: In fact, when the statute was first... Doing zero. [00:09:05] Speaker 04: Yes. [00:09:05] Speaker 04: The Congress Department, the US government only eliminated zeroing recently from the A to A calculation, as well as from the A to T calculation. [00:09:15] Speaker 04: Well, I'm sorry. [00:09:16] Speaker 04: No, they use it in the A to T calculation. [00:09:17] Speaker 04: But they've only... They used zeroing for a long time. [00:09:21] Speaker 05: When Congress first enacted the statute... Can you give an example of how you would do it? [00:09:25] Speaker 05: I mean, I'm not as smart as I may sound about it. [00:09:28] Speaker 05: I'm asking these questions to try to become educated. [00:09:32] Speaker 05: Can you give me an example of how you would do zeroing in an A to A transaction? [00:09:36] Speaker 02: Yes. [00:09:36] Speaker 02: To explain how you get an average of when you're using the zeros. [00:09:41] Speaker 04: Yeah, yes, that's perfect. [00:09:42] Speaker 04: So the whole, the basis of this argument is rooted in the calculation. [00:09:47] Speaker 04: Okay, so you've got either A to A or A to T. [00:09:51] Speaker 04: So under A to A, which is now the benchmark methodology that commerce uses in all cases, right? [00:09:56] Speaker 04: They've ever since zeroing was found to be unlawful at the WTO. [00:10:03] Speaker 04: All cases are A to A, average to average. [00:10:05] Speaker 04: So in the home market, you have an average, it's always just an average price. [00:10:09] Speaker 04: So let me give you the simplest example. [00:10:12] Speaker 04: You might have a home market price of $12. [00:10:16] Speaker 04: and then you might have, let's keep it simple, two U.S. [00:10:19] Speaker 04: sales, one for $14, one for $10. [00:10:24] Speaker 04: The A to A then, in the U.S., you would average these two prices together and make 12. [00:10:31] Speaker 04: So you'd have 12 against 12. [00:10:33] Speaker 04: So there would be no dumping there, right? [00:10:37] Speaker 02: Okay, but that's not what you're complaining about. [00:10:39] Speaker 04: No, but what I'm complaining about is, so under a true [00:10:44] Speaker 04: This gets to what is actually masking. [00:10:46] Speaker 04: So what this is getting at is to make an A to T comparison, you would then split that out to the 14 and the 10 and compare it to the 12. [00:10:59] Speaker 04: That is true masking. [00:11:01] Speaker 04: You then split out that comparison to reveal, the average reveals no dump, 12 to 12. [00:11:08] Speaker 04: The individual calculation reveals dumping of $2 on one and negative 2 on the other. [00:11:15] Speaker 04: That is mass-dumping. [00:11:18] Speaker 04: Now, you would zero that out under A to T by just not counting the negative number. [00:11:24] Speaker 04: Now, your question, Your Honor, on how you would apply that in an average-to-average case, that's what offsetting is. [00:11:32] Speaker 04: So the complications are very complicated. [00:11:36] Speaker 04: So they're called averaging groups. [00:11:39] Speaker 04: And so the example I gave you is for one control number. [00:11:43] Speaker 04: So that's where the averaging group can be. [00:11:45] Speaker 02: But you're not complaining about the group averaging either, I gather. [00:11:49] Speaker 04: We're not complaining about the group averaging. [00:11:51] Speaker 04: What we're complaining about is that under A to A, if you have three different control numbers, three different, let's call them averaging groups. [00:12:01] Speaker 04: Sometimes there could be nothing. [00:12:03] Speaker 04: Even under A to A, sometimes there's not. [00:12:05] Speaker 04: So let's say you have one control number where there is dumping and another one where there's not, where it's negative. [00:12:13] Speaker 04: Now under A to A, because of the WTO rules and because of what the U.S. [00:12:17] Speaker 04: government has agreed to, they no longer zero. [00:12:21] Speaker 04: That's called an offset. [00:12:22] Speaker 04: So you have an offset from a different averaging group. [00:12:26] Speaker 04: Our view is that that is not masking. [00:12:28] Speaker 04: That is simply offsetting across averages. [00:12:32] Speaker 04: True masking is actually the example I gave you with the 10 and the 12 and the 14 within an average. [00:12:41] Speaker 04: And the reason that's so is even if you look at Union Steel, that case talks about masking being masking within an averaging group. [00:12:51] Speaker 04: And that is also the situation which was the whole reason that Congress enacted this statute in the first place. [00:12:58] Speaker 04: was to switch from A to T to A to A. The concern was masking within an averaging group, not across averaging groups. [00:13:08] Speaker 04: And so the point I'm trying to make, as I see my time is running out, is that what commerce is doing fundamentally by using zeroing unequally at this first stage of the calculation, they're assuming every offset across the averages [00:13:26] Speaker 04: under A to A is masking dumping, and we're saying that's just not true. [00:13:30] Speaker 04: They shouldn't make that assumption. [00:13:31] Speaker 03: In your example of the two sales, different customers, 14 and 10, could 10 fit the first requirement for targeted dumping, namely be a, reflect a pattern of selling at a distinctly low price to a particular customer? [00:13:53] Speaker 03: It could reflect the pattern, although... And if you then used the statutory language for A to A, by definition of which, in which there is no zeroing, the statutory language is just weighted averages of the various prices, then you would, that would disappear. [00:14:19] Speaker 03: That would disappear under A to T. So it wouldn't be [00:14:23] Speaker 03: No, I just said under A to A. Oh, I'm sorry. [00:14:26] Speaker 04: Under A to A would not disappear because it would remain averaged. [00:14:31] Speaker 03: So you would have identified the 10 as a targeted group. [00:14:37] Speaker 03: That's correct. [00:14:37] Speaker 03: And then you would average and get a zero margin. [00:14:39] Speaker 03: There's something wrong with that. [00:14:40] Speaker 04: No, in fact, that's exactly the point, Your Honor, which is that if they do that correctly, which is they compare, let's just keep our simple example. [00:14:49] Speaker 04: A to A of 12. [00:14:52] Speaker 04: And you break it out to the 10 and the 14. [00:14:57] Speaker 04: That's true masking. [00:14:58] Speaker 03: We don't have a problem. [00:14:59] Speaker 03: And they should. [00:15:00] Speaker 03: I just want you to concentrate on the statute. [00:15:02] Speaker 03: I don't care about the true masking. [00:15:05] Speaker 03: This statute says you've identified a pattern and we don't have a dispute about that here, right? [00:15:10] Speaker 03: We do not have a dispute. [00:15:11] Speaker 03: Nails here and in the other case, the other test, but there is a separate sub-market. [00:15:16] Speaker 03: Are we allowed to say what that is here or is that secret? [00:15:20] Speaker 03: That this is a time period target group? [00:15:25] Speaker 03: Yeah, that's fine, yes. [00:15:26] Speaker 03: Okay. [00:15:27] Speaker 03: And then we're talking about the second requirement. [00:15:31] Speaker 03: Can commerce explain why [00:15:34] Speaker 03: the difference between, in your case, the 14 and the 10, can't be accounted for by simply taking what the statute refers to as comparing the weighted average of the normal values to the weighted average of the export prices. [00:15:52] Speaker 03: So now we're just averaging the US prices. [00:15:58] Speaker 03: How does that take account of the fact that we've already identified the 10 as a separate targeted group under the pattern language? [00:16:08] Speaker 04: Well, we would argue that by comparing the two different margins, which is what they're doing, they're taking the results under A to A and under A to T, that difference within the average [00:16:21] Speaker 04: they do account for by switching to A to T. They split it out and it reveals that individual dumping that A to A would not reveal. [00:16:31] Speaker 04: And so they do the comparison. [00:16:33] Speaker 03: I truly may be confused and I'd love to be enlightened. [00:16:38] Speaker 03: 10 and 14, home cost is 12. [00:16:41] Speaker 03: 10 is identified as a pattern of disparate prices under the [00:16:49] Speaker 03: whatever the B1I or something like that. [00:16:54] Speaker 03: So that's a targeted customer. [00:16:57] Speaker 04: If it's identified as such. [00:16:59] Speaker 03: Right. [00:16:59] Speaker 03: And then the second step is if you just do statutory A to A, which is simply averaging 14 and 10, [00:17:12] Speaker 03: You're going to come up with a zero dumping margin, right? [00:17:15] Speaker 03: Because the average would be 12 and the whole market price was 12. [00:17:19] Speaker 03: That's correct. [00:17:20] Speaker 03: So how could that possibly account for what you've already determined to be the 10 as a target? [00:17:27] Speaker 04: We're saying within that average, that's the correct way to do the comparison. [00:17:32] Speaker 03: So it would in fact disappear, and you would be using the averaging, the overall averaging method, so as to say, we determined that there was a targeted customer, but never mind, no duty. [00:17:45] Speaker 04: Yes, within the average, that's okay. [00:17:48] Speaker 04: What we're saying is that happens maybe 50 times, a thousand times. [00:17:51] Speaker 04: You have all the different control numbers. [00:17:53] Speaker 03: In your example, there were two. [00:17:56] Speaker 03: That's correct. [00:17:56] Speaker 03: You just explained that your position results in a finding that the 10 is a target, but zero dumping margin. [00:18:05] Speaker 03: That seems to me to undermine whatever your methodological point is. [00:18:11] Speaker 03: There should be a separate [00:18:16] Speaker 03: dumping margin for the tank. [00:18:18] Speaker 04: For the difference between the average calculation, the 12 to 12, and the transaction specific, right, that they split out within that control number, that's correct. [00:18:31] Speaker 04: What we're saying is that what commerce is doing is looking at all of the other [00:18:35] Speaker 04: That's just one example. [00:18:38] Speaker 04: But because there's averaging groups by all the different control numbers, this may happen 20 more times. [00:18:43] Speaker 04: And in another situation, because it's what happened here, there may be a situation where there is no masking at all within an average. [00:18:52] Speaker 04: That would be, if I take the same example, let's say it's 10 in the home market. [00:18:59] Speaker 04: And let's make it 14, 14, and 14. [00:19:04] Speaker 04: That's what all average is, 14. [00:19:07] Speaker 04: And that would show no dumping, plus negative 4, actually. [00:19:14] Speaker 04: And then if you broke it out to the transaction specific, it would still be 14, 14, and 14. [00:19:23] Speaker 04: So in that case, there would be no mass dumping revealed. [00:19:28] Speaker 04: And A to A would take account. [00:19:32] Speaker 05: A to A would work. [00:19:33] Speaker 05: When you average 14, 14, 14, you come up with 14, and that's above 12, and there's no call for it. [00:19:39] Speaker 04: We argue that works. [00:19:41] Speaker 04: And what it's showing is negative dumping in that situation. [00:19:44] Speaker 04: And so what commerce does is, in that situation, when they do the comparison between A to T, they just set all those back to zero without actually considering whether there was mass dumping or not. [00:19:56] Speaker 04: So in a sense, they are... They set what back to zero? [00:20:00] Speaker 04: They would set the negative dumping margins to zero. [00:20:04] Speaker 04: So in that example that I, the second example I gave you, which would be 10 to 14, 14 and 14, that would be a negative dumping margin because there's no dumping. [00:20:15] Speaker 04: It's 10 minus 14, so negative four. [00:20:19] Speaker 04: No, and under the a to a the negative 14 is counted as negative 14 But what commerce does is they set all those equal? [00:20:30] Speaker 04: And the a to t they set all those equal to zero right so that they are just the point is they're making an assumption that [00:20:36] Speaker 04: that there is masking across the averaging groups, when in fact that may or may not be true. [00:20:42] Speaker 04: In fact, our position is it's not true that masking, according to the SAA, which talked about conceal the dumping within an average, and Union Steel, which talked about mask dumping within an average. [00:20:55] Speaker 02: Let's hear from Commerce. [00:20:59] Speaker 02: I'm to pursue the same issue because it's been troubling that we get objections to zeroing with all sorts of, of goods that are imported and this is, this is helpful and you'll have more time. [00:21:16] Speaker 02: Okay. [00:21:17] Speaker 02: Mr. Kerman. [00:21:18] Speaker 05: Thank you, Your Honor. [00:21:20] Speaker 02: Okay. [00:21:21] Speaker 02: Do you agree with the explanation of zeroing? [00:21:25] Speaker 00: Well, Your Honor, I agree that the way zeroing works... Well, first of all, may it please the court? [00:21:34] Speaker 00: We agree that the way that zeroing works is by zeroing out negative margins. [00:21:39] Speaker 00: But no, we certainly don't agree with APEX's arguments. [00:21:43] Speaker 00: First, to deal with the meaningful difference issue where they concentrate their comment, appellants zeroing inconsistency argument on this issue. [00:21:56] Speaker 00: fails to acknowledge. [00:21:57] Speaker 02: Let's pursue the topic that we've been on, on zeroing and the effect on the bottom line, the final answer. [00:22:07] Speaker 00: Right. [00:22:07] Speaker 00: Well, I'm sorry, Your Honor, that's exactly where I was going. [00:22:10] Speaker 00: The whole point of considering applying the A to T methodology with zeroing is that it reveals dumping that is otherwise masked by the averaging and offsetting features [00:22:25] Speaker 00: of the A to A methodology and I can briefly try to clear up some information about the history of the A to A methodology because it goes directly to this court's precedence in U.S. [00:22:36] Speaker 00: Steel and ultimately Union Steel. [00:22:38] Speaker 00: The headline on those precedents is that both of them, even though the type of zeroing arguments were slightly different, the rationale for both decisions was that commerce was using zeroing with the A to T methodology and not using zeroing with the A to A methodology and the whole [00:22:55] Speaker 00: The crux of the reasoning there was that it's okay for commerce to continue zeroing with A to T while not continue zeroing with A to A. A to A used to incorporate zeroing now more than a decade ago. [00:23:08] Speaker 00: Commerce ceased zeroing as a result of WTO decisions. [00:23:13] Speaker 00: That resulted in this court's decision in U.S. [00:23:16] Speaker 00: Steel. [00:23:17] Speaker 03: Can you explain to me how do you include zeroing [00:23:21] Speaker 03: if in A to A, if A to A is meant to be a, to mean the same thing as what's in 1677, [00:23:38] Speaker 00: Sure, your honor. [00:23:43] Speaker 00: But it's important for me to note that that is 100% not the way the A to A methodology works. [00:23:48] Speaker 00: There's no world in which commerce would apply the A to A methodology with zeroing today. [00:23:53] Speaker 00: It ceased zeroing in A to A methodology a long time ago and doesn't do it. [00:23:57] Speaker 03: We have at least principally a statutory question, not [00:24:02] Speaker 03: not something called A to A, which is not in the statute. [00:24:06] Speaker 03: So I'd like you to explain to me how this statutory language means anything other than simply comparing the weighted average of the normal values of the home country to the weighted average of the export prices. [00:24:21] Speaker 00: It's not in that particular statutory provision. [00:24:24] Speaker 00: What this court has ruled previously is the statute, this particular statutory provision is utterly silent about when making those comparisons, whether commerce should be using zeroing or not. [00:24:34] Speaker 00: It then, what this court's jurisprudence has focused on is a section of the statute, I believe it's 1677-35. [00:24:40] Speaker 00: It's certainly cited in the background legal discussion in our brief. [00:24:44] Speaker 00: where it talked about the dumping margin exceeding the normal value exceeding the export price and this court's long-time precedence going back to a Timken case in 2006 were about whether... There was a lot of deference and particularly it came up in extraordinarily complex fact patterns of importation. [00:25:06] Speaker 02: Let's talk about this case and how it applies and [00:25:09] Speaker 02: Also, if it's not being used anymore for the seventh and eighth administrative reviews, it was used apparently. [00:25:16] Speaker 00: Well, so that's the whole point. [00:25:19] Speaker 00: Now that the A to A methodology does not incorporate zeroing, the fact that the A to T, it's even more important that commerce is continually able to use zeroing as part of the A to T methodology, because now that the A to A methodology both incorporates averaging and offsetting, [00:25:37] Speaker 00: The type of offsetting that your honor has discussed with counsel for APEX is exactly what Commerce is seeking to combat. [00:25:47] Speaker 00: That's why, and that's been extremely well established in both this court's and [00:25:54] Speaker 00: the Court of International Trade's jurisprudence. [00:25:56] Speaker 00: That is why commerce uses the A to T methodology with zeroing. [00:26:01] Speaker 00: In particularly, both U.S. [00:26:03] Speaker 00: Steel and Union Steel recognized that zeroing is inextricably linked with the A to T methodology. [00:26:10] Speaker 00: So the whole idea is that the methodologies are different. [00:26:14] Speaker 00: That's why you're using the A to T methodology to reveal dumping that would otherwise be masked by the offsetting feature. [00:26:23] Speaker 03: Again, you're going to have to keep correcting me about these things. [00:26:27] Speaker 03: But it seems to me the really simple version of your argument about the account for is that [00:26:34] Speaker 03: What the statute is referring to is what's in that little eye thing that we referred to, which is no zeroing. [00:26:42] Speaker 03: And if you don't have zeroing, you're going to simply lose the fact that you've identified the target market as, or target customer, target time period. [00:26:54] Speaker 03: You win, easy. [00:26:56] Speaker 03: But if you start saying, oh, well, this A to A can have lots of varieties, some of which include zeros, then I don't understand why none of them can take account of this. [00:27:09] Speaker 00: Your Honor, we 100% agree with your reasoning. [00:27:12] Speaker 00: And I need to emphasize again, commerce does not apply the A to A. It's not part of commerce's lexicon today to apply the A to A methodology with zeroing. [00:27:22] Speaker 00: In a past world, it's not that particular statutory provision that the court has interpreted the statute generally as ambiguous with respect to zeroing. [00:27:33] Speaker 00: But no one here argues that commerce ever applies the A to A methodology with zeroing. [00:27:39] Speaker 00: It doesn't do it. [00:27:40] Speaker 00: And that's why your honor's reasoning is exactly correct. [00:27:43] Speaker 00: Because the way commerce applies the A to A methodology and the way that Apex would want commerce to apply the A to A methodology [00:27:52] Speaker 00: ultimately is with the offsetting that masks the actual dumping that was revealed here with the A to T method. [00:27:59] Speaker 00: And that's one important thing for us to know. [00:28:02] Speaker 05: Your adversary is not asking for the use of A to A with zeroing, is he? [00:28:07] Speaker 00: No, and if he was, that would be totally inadequate. [00:28:09] Speaker 05: It's confusing how this got into our argument here today, the notion that someone wants to zero inside of A to A mathematics. [00:28:17] Speaker 00: He has argued, to be fair to him, he has argued that the appropriate way to compare the A-to-A and A-to-T methodologies might be using A-to-A with zeroing, but that's totally illogical. [00:28:28] Speaker 00: That's not how it's applied. [00:28:30] Speaker 05: What is your take on the nature of his complaint? [00:28:36] Speaker 05: He said here that he's arguing about the use of zeroing at the front step. [00:28:43] Speaker 05: when you're looking for meaningful differences. [00:28:44] Speaker 05: That's what I understand. [00:28:46] Speaker 00: That's right. [00:28:46] Speaker 05: He doesn't object to using zeroing at some later point in time to take with a mass transaction and to peel it out so it becomes subject to a kind of reeling duty. [00:28:58] Speaker 00: That's right. [00:28:58] Speaker 05: And what Congress is doing here is simply... You understand him to be saying that if you're going to use zeroing in A to T at the front step, then you have to use zeroing in A to A. [00:29:09] Speaker 00: I understood him to be arguing that and I think that's completely illogical because it's not how it works and it's defeating the point. [00:29:18] Speaker 00: I mean, of course, if you're zeroing in A to A, you end up revealing a bunch of dumping, but that's the whole point. [00:29:24] Speaker 00: It's dumping that's masked. [00:29:26] Speaker 00: in the normal way the commerce applies A to A. And to the point, Apex's counsel made a point early on about this being kind of self-confirming and tautological. [00:29:37] Speaker 00: And on that point, I would commend your honors to page 20 to 23 of intervener ad hoc shrimps, intervener brief, where they listed for three pages quite a number of cases where the agency [00:29:54] Speaker 00: applied the meaningful difference test just the way it does here and determined that there was not in fact a meaningful difference between A to A and A to T methodology. [00:30:03] Speaker 00: So it doesn't always result in a finding of a meaningful difference. [00:30:06] Speaker 03: Can you give a simple schematic, just an example, I don't mean pointing to a case, just talk about an example in which under your view the account for provision [00:30:19] Speaker 03: might actually result in deciding, oh, this does account for. [00:30:26] Speaker 00: Sure. [00:30:26] Speaker 00: Those are all the cases at 20 to 23. [00:30:29] Speaker 03: I don't want to hear about reference cases. [00:30:31] Speaker 03: I want you to explain it in some sort of numerical example, like his 1014. [00:30:37] Speaker 00: Sure. [00:30:38] Speaker 00: Well, for example, you could have an instance where even though there's a pattern of targeted dumping that has been identified, when you ultimately apply the A to T methodology, it doesn't end up being in a meaningful amount. [00:30:52] Speaker 03: For example, it goes from point zero to... I'm sorry, but the statute doesn't talk about A to T. It says [00:31:00] Speaker 03: let's use A to A as a shorthand for the statutory phrase, doesn't account for it. [00:31:06] Speaker 03: Show me an example where, in your view, it could account for what you've already determined by the NAILS test, by the Cohen's D test, to be a separate target area. [00:31:20] Speaker 00: Sure, and let's say you have two targeted sales, and everything else is not targeted. [00:31:27] Speaker 00: The difference between the A to A and the A to T method that you're going to get, even if those couple sales end up passing the nails test, are not going to result in a meaningful difference between A to A and A to T. And as a result, commerce would not determine that A to A could not account for the dumping. [00:31:47] Speaker 00: Or if a party is not engaging [00:31:50] Speaker 00: the party's not engaging in dumping if there's a pattern of significant price differences, but it turns out that it's not actual dumping. [00:31:58] Speaker 05: They're all 14. [00:32:01] Speaker 00: Well, or maybe they're all above the normal value. [00:32:04] Speaker 00: That's what I mean. [00:32:04] Speaker 05: Then you use 80. [00:32:07] Speaker 00: Right. [00:32:07] Speaker 00: And there have been definitely [00:32:11] Speaker 00: reasonable number of instances, all of which, and not all of which, but a number of which are set forth in page 20 to 23 of Ad Hoc Shroom's brief where Commerce has applied the same analysis and said, you know what? [00:32:22] Speaker 00: A to A, we don't see a meaningful difference. [00:32:24] Speaker 00: A to A is accounting for the pattern we found here. [00:32:27] Speaker 03: You can meet the pattern test even if every price is an overprice. [00:32:32] Speaker 03: You can because the pattern test... It's all internal to the comparisons of the U.S. [00:32:37] Speaker 03: prices. [00:32:37] Speaker 03: It has nothing to do with the home market price. [00:32:40] Speaker 00: Well, that's right. [00:32:41] Speaker 00: And Commerce has said that in a number of places here where Commerce is just determining whether... That's what the statute says. [00:32:47] Speaker 00: That's right. [00:32:48] Speaker 00: And following the statute, Commerce has articulated in its reasoning one question on this. [00:32:54] Speaker 00: Hey, at the pattern stage, we're not looking at dumping. [00:32:56] Speaker 00: We're looking at the statutory criteria of whether there's a pattern of significant price differences. [00:33:02] Speaker 00: which, and the SAA is very clear on this at 843, it says it may mean that there's targeted dumping. [00:33:10] Speaker 00: Similarly, the statute doesn't say the differences, it says such differences. [00:33:14] Speaker 00: So the pattern serves as kind of a red flag that, hey, we see a pattern, there seems to be targeted going on here. [00:33:20] Speaker 00: It's only when commerce ultimately applies the methodology that it [00:33:26] Speaker 00: that it determines the dumping, because that's where it's comparing U.S. [00:33:32] Speaker 00: prices and normal values to actually calculate the margin. [00:33:39] Speaker 05: And so that thus applies A to A, and it comes up with a number that applies A to T. It comes up with a number, and if A to T is bigger, then they say A to A didn't account. [00:33:51] Speaker 00: That's right, and one last point on that. [00:33:54] Speaker 00: That goes to this court's decision in U.S. [00:33:57] Speaker 00: Steel, where the appellants in U.S. [00:34:01] Speaker 00: Steel were complaining that that's when Congress had stopped zeroing in A to A. Those were different facts. [00:34:06] Speaker 02: We never held that zeroing that applies in certain cases therefore is immunized from scrutiny. [00:34:14] Speaker 02: no matter what the facts might show. [00:34:17] Speaker 00: I understand, Your Honor, but what this Court said is it recognized that commerce still intended to apply zeroing when it used the A to T methodology. [00:34:26] Speaker 02: We recognized that zeroing was a shortcut and we deferred to the agency. [00:34:32] Speaker 00: Understood, Your Honor. [00:34:34] Speaker 00: Likewise here, it's appropriate to defer to the agency [00:34:38] Speaker 00: because it's reasonably using zeroing to reveal mass dumping as it has continually for, you know, at least going back to U.S. [00:34:52] Speaker 00: steel. [00:34:53] Speaker 02: Okay, you've shared your time with Mr. Butler? [00:34:56] Speaker 00: Yes, thank you, Your Honor. [00:35:04] Speaker 02: Okay, Mr. Butler, tell us who you're representing. [00:35:06] Speaker 01: Hi, Philip Butler, defendant appellee, American Shrimp Processors Association. [00:35:13] Speaker 02: Okay, can you bring some practicality to the generalizations we've been discussing? [00:35:20] Speaker 01: Sure. [00:35:21] Speaker 01: I guess I would want to start with an argument that actually Commerce made in its brief [00:35:26] Speaker 01: And one thing that was reasonable for Commerce to apply the A to A without zeroing and A to T with zeroing in the meaningful difference test was that when it actually applies its remedy, it applies the A to A without zeroing and the A to T with zeroing. [00:35:40] Speaker 01: Thus it would seem kind of illogical for it to what it does in its remedy phase not also be used in its meaningful difference phase when it's deciding what methodology it's going to use, whether it's going to use the A to A or the A to T. [00:35:57] Speaker 01: And I think it's also important to understand that when looking at what the A to T is, I mean, the A to T, inherent to the A to T is zeroing. [00:36:07] Speaker 01: So you can't really ask commerce not to zero in this methodology, because that is what the methodology does, it zeros, as opposed to the ADA methodology, where they do not zero. [00:36:23] Speaker 01: I think it's also important to say that when we're talking about what we're trying to do is we're trying to decide whether there is mass dumping. [00:36:33] Speaker 01: And this court has decided that it is zeroing that reveals the mass dumping. [00:36:38] Speaker 01: And it is the A to A methodology without zeroing that actually does mass the dumping or the price differences in this case. [00:36:51] Speaker 01: Is there anything I can help you with? [00:36:57] Speaker 02: It's very strange. [00:37:02] Speaker 02: It's a shortcut that we've accepted in certain complex cases. [00:37:10] Speaker 02: Here it's being brought to us in a very tangible form. [00:37:15] Speaker 02: The result is different, with or without zeroing, I gather, in these cases. [00:37:21] Speaker 02: And that certainly is a matter of concern with respect to statutory compliance. [00:37:27] Speaker 01: Yes, I understand. [00:37:29] Speaker 01: But again, zeroing is not necessarily a shortcut, I don't think. [00:37:35] Speaker 01: I think zeroing is just a methodology that actually reveals what's going on, what's going on underlying when you have an A to A methodology, which is obviously taking these higher prices and taking lower prices and averaging them. [00:37:48] Speaker 01: You're not able to see then, well, is there targeting going on? [00:37:52] Speaker 01: As opposed to the A to D methodology with zeroing, you can then see, okay, here's a price. [00:37:58] Speaker 01: We're not going to zero it. [00:38:00] Speaker 01: We're going to zero the upper prices so that we can really figure out, okay, what's going on down below? [00:38:06] Speaker 01: Where is there dumping? [00:38:08] Speaker 01: And how can we be sure that that's not being masked by prices above? [00:38:13] Speaker 03: Okay, thank you. [00:38:17] Speaker 03: You agree that the identification of a distinctive area, I'm going to try as hard as I can to avoid the term target, because target does seem to import some notion of underpricing. [00:38:32] Speaker 03: But the definition, this pattern thing, could be a identified area in which [00:38:40] Speaker 03: there is, for example, uniquely high pricing compared to other pricing of the same exporter. [00:38:49] Speaker 01: But it has to be on comparable or the same products. [00:38:52] Speaker 03: Yes, of course on the same products. [00:38:54] Speaker 03: I'm trying to make a distinction between what the pattern is about, which is a pattern within U.S. [00:39:00] Speaker 03: prices, and that says nothing at all about the relation of those U.S. [00:39:05] Speaker 03: prices to the prices in the home country. [00:39:09] Speaker 01: That's correct. [00:39:10] Speaker 03: Okay. [00:39:11] Speaker 03: So what's the relation between the account for that internal U.S. [00:39:19] Speaker 03: disparity? [00:39:20] Speaker 03: What's the relation of that line, which account for the internal U.S. [00:39:25] Speaker 03: disparity, have to do with the relation between the U.S. [00:39:29] Speaker 03: prices and the home market prices? [00:39:32] Speaker 01: Well, again, you're looking at the price differences in the U.S. [00:39:39] Speaker 03: That's the pattern. [00:39:41] Speaker 03: That's the pattern. [00:39:43] Speaker 01: And so you'll have, obviously, upper prices. [00:39:45] Speaker 01: You'll have lower prices. [00:39:47] Speaker 03: Lower than the upper, but still possibly higher than the home. [00:39:52] Speaker 01: Possibly, sure. [00:39:53] Speaker 01: Yes. [00:39:54] Speaker 01: And then you can then determine whether there's a pattern, meaning a difference between the two. [00:39:59] Speaker 03: Right, so prices in California are one standard deviation away from prices in the rest of the country. [00:40:06] Speaker 03: So far we haven't said whether there's any dumping anywhere. [00:40:11] Speaker 01: Well, if you have... Okay, sure. [00:40:16] Speaker 01: Yeah, you could do that. [00:40:17] Speaker 03: Okay, now explain if that's what the pattern is. [00:40:22] Speaker 03: What's the range of permissible meanings of AA cannot account for that? [00:40:32] Speaker 03: Because AA, you've now suddenly introduced something about the relation to the home prices. [00:40:40] Speaker 01: Okay, so then when you're doing your dumping margin, yes, you do introduce the home prices on that next phase. [00:40:47] Speaker 01: Okay, well, let's figure out what the dumping margin is. [00:40:50] Speaker 01: But in the case that I think that you were just talking about, prices were higher. [00:40:54] Speaker 01: I'm sorry, you did say lower. [00:40:55] Speaker 01: If they were lower, then yes, you could say, okay, is there dumping in California versus some other place? [00:41:01] Speaker 01: Is it a regional difference? [00:41:03] Speaker 01: And then you'd have higher prices someplace else. [00:41:06] Speaker 01: You'd say, okay, here's what the pattern is. [00:41:09] Speaker 01: Now, in order to make sure that those higher prices in another region do not mask those dumped prices in California, we use the A to T methodology without zero. [00:41:22] Speaker 01: Does that answer your question? [00:41:25] Speaker 03: That's fine for now. [00:41:26] Speaker 03: Thanks. [00:41:28] Speaker 02: Thank you. [00:41:28] Speaker 02: Thank you, Mr. Butler. [00:41:32] Speaker 02: OK. [00:41:33] Speaker 02: Let's see. [00:41:34] Speaker 02: Suppose I announce the next case, and we'll proceed. [00:41:39] Speaker 02: I assume that the issues of the seventh and eighth administrative review are the same, is that correct? [00:41:46] Speaker 04: There's some overlap and some of the issues are unique. [00:41:49] Speaker 02: Okay, well then I'll ask you what the difference is. [00:41:51] Speaker 02: So let's call number 161769, again, Apex frozen foods against the United States. [00:41:58] Speaker 02: And let's proceed.