[00:00:00] Speaker 00: Our next case for today is 2018-1300, ABV versus United States. [00:00:33] Speaker 00: Mr. Bond, please proceed when you're ready. [00:00:50] Speaker 06: Mr. Bond, before you get into your argument time, I just have, I guess what I call a housekeeping question. [00:00:57] Speaker 06: Your brief is marked confidential. [00:01:01] Speaker 06: I don't see that marking on the government brief or the ABB brief. [00:01:06] Speaker 06: Can we assume that there's nothing confidential here so that we can have a free discussion? [00:01:14] Speaker 06: And can we also assume that for purposes of any opinion that may be written that there's nothing in here that we need to be concerned about in terms of confidentiality? [00:01:27] Speaker 06: It's always an inhibiting factor when you see this, and yet often you come to oral argument and there's nothing really confidential. [00:01:35] Speaker 06: It's just sort of a holdover from the lower court. [00:01:38] Speaker 05: Right. [00:01:38] Speaker 05: I understand. [00:01:39] Speaker 05: There could be certain elements of data in the appendix that would still be considered confidential with respect to specific commissions or expenses that were incurred. [00:01:49] Speaker 00: Well, your entire brief is marked confidential, and I don't see any designation within the brief of particular things that are the reason that things are confidential. [00:01:57] Speaker 05: May Mr. Kindler speak? [00:01:58] Speaker 00: Yeah, go ahead. [00:01:59] Speaker 03: Thank you, Your Honor. [00:02:00] Speaker 03: If you look at the certificate of compliance, the brief itself contains no confidential information. [00:02:05] Speaker 03: However, the agenda contains confidential information, which is why we as counsel as a precaution mark the brief in its entirety confidential. [00:02:13] Speaker 00: So nothing in the brief is confidential. [00:02:15] Speaker 00: So anything that's in the brief is fair game. [00:02:16] Speaker 06: That's correct, Your Honor. [00:02:17] Speaker 06: So for purposes of the two issues before us, the failure to exhaust issue and the commission offset issue, we don't need to worry about confidentiality. [00:02:29] Speaker 03: Insofar as it's discussed in the brief, that's correct, Your Honor. [00:02:32] Speaker 06: Okay. [00:02:32] Speaker 06: Thank you. [00:02:33] Speaker 06: You're welcome. [00:02:34] Speaker 06: Again, no time was taken off. [00:02:35] Speaker 05: No, it's fine. [00:02:36] Speaker 05: No. [00:02:36] Speaker 05: I just wanted to get that straightened out at the start. [00:02:38] Speaker 05: Understood. [00:02:39] Speaker 05: Thank you. [00:02:41] Speaker 05: Good morning. [00:02:41] Speaker 05: May it please the court. [00:02:42] Speaker 05: My name is David Bond. [00:02:43] Speaker 05: I'm a partner with Whiting Case and I'm appearing this morning on behalf of Hyundai Heavy Industries. [00:02:48] Speaker 05: Our appeal presents two issues. [00:02:50] Speaker 05: The first is whether the circumstances presented before the CIT presented a strong contrary reason for the CIT to overlook the statutory language which directs it to require exhaustion. [00:03:05] Speaker 05: It's important, we think, to understand from the outset that the question here is whether [00:03:09] Speaker 05: an extraordinary circumstance existed that warranted not requiring exhaustion. [00:03:14] Speaker 05: Both the Department of Commerce and the CIT were of the view that ABB did not, in fact, exhaust. [00:03:22] Speaker 05: So the question is whether there's something extraordinary that justifies the failure to exhaust. [00:03:26] Speaker 06: Well, let me ask you. [00:03:28] Speaker 06: I guess it's appendix 116, excuse me, through 118, which is the commerce remand determination. [00:03:38] Speaker 06: At those pages, it seems to me the commerce lays out a little bit of a history of what happened in the case, and it seems to me that it makes a pretty good showing that in the [00:03:51] Speaker 06: final decision and in the amendments to the final decision that there was some confusion and back and forth and it kind of struck me that under those circumstances the CIT did not abuse its discretion in saying I'm going to send it back [00:04:12] Speaker 06: for commerce to take another look. [00:04:14] Speaker 06: It seemed to me that it was not inappropriate, which I think is appropriate, it's the word in the statute, it was not inappropriate for the CIT to do that given what's spelled out and no one disputes at those pages. [00:04:31] Speaker 05: I think I would direct the court to page six of our reply brief where we discuss the actual complaint that ABB raised initially before the CIT, the specific programming language with respect to the treatment of commissions and the commission offset, which is exactly precisely the same language which was presented in the preliminary results. [00:04:51] Speaker 05: There's no difference whatsoever in the way that the Commerce Department treated [00:04:54] Speaker 05: U.S. [00:04:55] Speaker 05: commissions and its second amended final results compared to the preliminary results and there's no difference in the way it treated the commission offsets. [00:05:04] Speaker 05: And therefore in the evolution from the preliminary results to the second amended results there were some changes in descriptions and things like this as to what was going on. [00:05:12] Speaker 05: But the essential claim, as it was stated, the specific programming language that was identified in the complaint was precisely the same as the programming language in the preliminary results. [00:05:23] Speaker 05: And that issue was not raised in any way in the case briefs that ABB submitted for the Commerce Department. [00:05:29] Speaker 00: I would also- Maybe the program language should have tipped ABB off. [00:05:33] Speaker 00: I agree with you. [00:05:34] Speaker 00: But I don't know that I can find there's clear error for the CIT's determination that commerce failed to explain itself in its decision. [00:05:42] Speaker 00: Because this is abuse of discretion. [00:05:43] Speaker 00: I don't get to review it de novo. [00:05:44] Speaker 00: And so even if I think ABB should have been unnoticed given the computer programming results, I don't know that I can, I don't know that that's inconsistent. [00:05:55] Speaker 00: with me concluding that commerce did not clearly err, i.e. [00:05:58] Speaker 00: the burden I have to use, in determining that it failed to adequately express this treatment of the commission offsets. [00:06:06] Speaker 00: How do you respond to that? [00:06:07] Speaker 05: Well, I would respond, I think, by pointing the court to Boomerang and Boomerang Tube, where this court very clearly placed the burden on the litigants there to have anticipated potential issues that could have been raised and didn't excuse them. [00:06:24] Speaker 00: But in individual cases, you can do that. [00:06:27] Speaker 00: But here, I have the burden of reviewing commerce's determination that it didn't sufficiently explain itself for clear error. [00:06:40] Speaker 00: How do I get around that? [00:06:44] Speaker 06: It did seem, Mr. Bonnet, Boomerang 2, which you rely on and correctly describe in your brief, involved a different set of facts. [00:06:55] Speaker 06: And the question of whether the CIT abused its discretion is highly sort of fact-bound or fact-specific. [00:07:02] Speaker 06: And you didn't have in Boomerang 2 what you seem to have here, commerce diverging from its normal practice, [00:07:10] Speaker 06: and not giving an adequate explanation for that, which was the basis for the CIT remand in ABB 1, I think. [00:07:18] Speaker 05: Well, at the time that the preliminary results were issued, the programming language was the way the Commerce Department was approaching the issue. [00:07:27] Speaker 05: It's the way it approached in previous proceedings. [00:07:31] Speaker 05: We, as well as our colleagues, [00:07:34] Speaker 05: that represent ABB have experts on staff that are familiar with the Commerce Department's programming language were able to interpret what the Commerce Department was doing and yet there's no mention of this in their case brief. [00:07:46] Speaker 05: It seems to me odd that we would excuse them from the obligation to have raised timely the issues with respect to the preliminary results in their case brief based on things that transpired long after in the amended results based on theoretical clerical errors in the Commerce Department's program. [00:08:03] Speaker 05: At the point in time when ABB was required to exhaust its remedy by raising issues that it thought were relevant in its case brief, [00:08:11] Speaker 05: It had the programs in front of it. [00:08:13] Speaker 05: The programs clearly identified the error, which it later raised at the CIT. [00:08:18] Speaker 05: So while things that happened after the preliminary results in the case briefs were filed may have added further points for discussion in that appeal, the core issue, which was whether the Commerce Department was correctly accounting for the commissions and the offsets, was perfectly clear in the preliminary results. [00:08:34] Speaker 06: Well, let me, if I could, just switching from the abuse of discretion issue to the merits. [00:08:40] Speaker 06: 19 USC, I always have to go on a little bit of a trail here on these statutes. [00:08:47] Speaker 06: 1677 BAC 63. [00:08:51] Speaker 06: calls for adjustment to normal value based upon, quote, other differences in the circumstances of sale. [00:08:58] Speaker 06: And I understand the argument that you're making about the commission offsets here, but my question is, was there, what if any, apart from your argument about commission offsets, what if any adjustments were made in this case under the circumstances of sale provision? [00:09:15] Speaker 05: Well, there are a variety of factors that relate to selling expenses in particular that are accounted for through a circumstance of sale adjustment. [00:09:23] Speaker 05: For example, warranty claims would be one. [00:09:26] Speaker 05: There are adjustments made with respect to differences in the credit period in each market, the credit period being the time of... Were those, what you're describing made in this case? [00:09:35] Speaker 06: Yes. [00:09:36] Speaker 05: Yes, Your Honor. [00:09:36] Speaker 06: What, in other words, what circumstances of sale adjustment [00:09:40] Speaker 06: were made in this case. [00:09:42] Speaker 06: And if you don't want to use time rattling them off, you can direct us to where in the record it's shown that they were made. [00:09:50] Speaker 05: Do you have the programming language? [00:09:54] Speaker 05: We'll research that. [00:09:55] Speaker 05: I'll provide the information during my rebuttal time if that's OK. [00:09:58] Speaker 06: That's fine. [00:09:59] Speaker 05: The basic point, however, is that various circumstance of sale adjustments are made typically and were made in this case for concepts aside from the commission issue. [00:10:09] Speaker 05: In our view, the commission issue really boils down to one of fairness and accuracy. [00:10:15] Speaker 05: It's quite clear that the statute directs that prices for exports to the United States and prices that are being used for normal value be adjusted to an ex-factory basis, a net price, and that in doing so, in order to arrive at a fair calculation, there has to be a symmetric adjustment or allowance to each side to account for the same sorts of expenses. [00:10:37] Speaker 05: So with respect to commissions in particular, where commissions are incurred both with respect to U.S. [00:10:42] Speaker 05: sales and sales in the domestic market, you see that the commissions are being deducted. [00:10:46] Speaker 05: There's an allowance being made for those on each side of the equation to result in a symmetric calculation. [00:10:52] Speaker 05: And you primarily rely, I guess, for your argument on the regulation, right? [00:10:57] Speaker 06: Well, you take the next step. [00:10:59] Speaker 05: We take the next step, Your Honor, which is that the Commerce Department has correctly recognized that really a commission is accounting for a selling function. [00:11:07] Speaker 05: It's accounting for the effort, the expense that a company makes to sell the product. [00:11:11] Speaker 05: And so in a circumstance where you have commissions being put with respect to one market but not the other, it's appropriate to arrive at a symmetric comparison to account for the selling expenses in the market where commissions aren't being paid. [00:11:23] Speaker 05: You offset the commissions in one market with the selling expenses being made in the other market. [00:11:29] Speaker 05: to sort of equally account for the selling function that's being performed, which is why if you look at the regulation, the only condition that the regulation speaks to is that the Commerce Department has made a reasonable allowance for commissions in one of the markets and no commission is paid in the other market. [00:11:47] Speaker 05: There's absolutely no further condition imposed, particularly the condition that the Commerce Department imposed here. [00:11:54] Speaker 05: that the condition must have been paid or incurred in the foreign market with respect to the US sales. [00:12:02] Speaker 05: Our view is that the statute speaks clearly to fairness and symmetry in terms of the calculations and the allowances that are made on each side of the equation. [00:12:11] Speaker 05: The regulation itself, with respect to the commission offset, correctly seeks that sort of symmetry and balance by requiring an offset for expenses in one market where commissions are being deducted in another market [00:12:24] Speaker 05: But here, for whatever reason, the Commerce Department has interpreted that unreasonably in only one circumstance not to apply, and that circumstance is where the commissions paid with respect to U.S. [00:12:36] Speaker 05: sales are incurred in the United States as opposed to outside the United States. [00:12:45] Speaker 05: Ultimately, the result is that in every single dumping calculation of this particular sort, whereas the CEP transaction, which means that the U.S. [00:12:53] Speaker 05: sales made through an affiliated reseller where the commissions are incurred in the United States will artificially have the dumping margin increase substantially. [00:13:01] Speaker 05: In our case, just with respect to this one review, it sits over a million dollars. [00:13:05] Speaker 05: And over the course of multiple reviews, it will be many, many millions of dollars. [00:13:09] Speaker 05: In our view, it's unreasonable. [00:13:11] Speaker 05: There's nothing in the statute that results or directs the Commerce Department to make this sort of asymmetric adjustment. [00:13:20] Speaker 05: There are places in the statute where Commerce is specifically directed to make asymmetric adjustments. [00:13:25] Speaker 05: In particular, with respect to profits that are incurred on affiliated resales, the statute requires the Department to make these sorts of asymmetric adjustments. [00:13:33] Speaker 05: But that's not the case with respect to the circumstance of sale adjustment. [00:13:37] Speaker 05: and the regulation on the face doesn't impose. [00:13:39] Speaker 00: I just want to make sure I understand the interpretation and issue here. [00:13:42] Speaker 00: We have to give deference, right, to an agency's interpretation of its own regulation in this circumstance. [00:13:49] Speaker 00: Is there any evidence, and if there is, I'm sorry I've missed it. [00:13:52] Speaker 00: Is there any evidence that Commerce is acting inconsistently, that in other instances, apart from your evidence of what happens abroad versus at home, which I understand. [00:14:01] Speaker 00: But is there any other evidence where in other, [00:14:05] Speaker 00: in other sorts of cases like this, other amnesty orders or implementation, that they are treating this scenario differently? [00:14:14] Speaker 05: Well, I would say the most direct evidence is the discussion or case brief with respect to the Commission offset in the six scenarios that we've described. [00:14:23] Speaker 05: And essentially you get to six different scenarios because you have situations in the U.S. [00:14:27] Speaker 05: where you have EP and CEP cells, which is [00:14:29] Speaker 00: Are those hypotheticals on your part, or are those the actual? [00:14:33] Speaker 05: They're actual, and we provide citations. [00:14:35] Speaker 05: So in five out of the six scenarios, what you see is that where a commission is incurred in one market, but not the other, a commission offset is made to create this sort of symmetry that I'm describing. [00:14:46] Speaker 05: In only one circumstance, which we describe as scenario six, is the commission offset denied. [00:14:51] Speaker 05: And it's denied on the basis that the commissions in the US were incurred in the US. [00:14:56] Speaker 05: which is why I'm saying it's not. [00:14:58] Speaker 00: But each of those is a different scenario than the commissions being incurred in the US. [00:15:04] Speaker 00: The one, the six that you're, you're just, you're trying to show me how based on those that there seem to be asymmetric results with no reasonable explanation for why they're asymmetric, but that wasn't exactly the question I was trying to get at. [00:15:16] Speaker 00: I was trying to get at is there any inconsistent behavior by commerce vis-a-vis this exact specific issue. [00:15:21] Speaker 00: Specific issue. [00:15:22] Speaker 00: Yeah. [00:15:23] Speaker 05: Prior to our case and prior to, I think, one case before that, the Commerce Department had granted commission offsets under these circumstances. [00:15:31] Speaker 05: About a year or so before our case, they decided to stop doing that without any particular explanation and certainly no change in the regulation or the law that would have warranted it. [00:15:39] Speaker 05: So prior in time, yes, there are inconsistent [00:15:42] Speaker 05: treatments of the same issue, but currently the approach the Commerce Department has taken is what they're consistently doing. [00:15:56] Speaker 05: The Commerce Department points to a pasta case, which we cite in our... In which case is that? [00:16:03] Speaker 05: Pasta. [00:16:04] Speaker 05: There's something more around pasta. [00:16:05] Speaker 06: There were two iterations of that. [00:16:07] Speaker 06: One at 64, Federal Register, and the other one at 80, I think. [00:16:11] Speaker 06: You're talking about the second one? [00:16:14] Speaker 06: The more recent pasta case? [00:16:16] Speaker 05: I believe so, yes, Your Honor. [00:16:17] Speaker 05: Okay. [00:16:20] Speaker 06: I thought you were probably talking about the pasta case, but I just wasn't sure. [00:16:24] Speaker 06: Okay. [00:16:25] Speaker 05: Yes, we're citing to, well, we say until recently on page 25 of our case brief, citing to pasta federal register notice in 1999 that those sorts of commission offsets were in fact made. [00:16:39] Speaker 05: Unless you have further questions, I'll reserve my remaining time. [00:17:00] Speaker 04: Thank you, and may it please the court. [00:17:02] Speaker 04: As the court noted, there are two issues raised by the appellants in the case. [00:17:07] Speaker 04: First is with respect to exhaustion of administrative remedies, for which we are taking no position on appeal. [00:17:13] Speaker 04: The second is the question of the commission offsets. [00:17:15] Speaker 04: with respect to the commission offsets. [00:17:19] Speaker 04: Commerce's determination, as expressed in the remand results, was a reasonable interpretation of the statute and its own regulations. [00:17:29] Speaker 04: And the starting point for that is the distinction between U.S. [00:17:33] Speaker 04: price and normal value. [00:17:35] Speaker 06: Mr. Toto, let me ask you, and I'm sorry for jumping in in the middle of your sentence there, [00:17:39] Speaker 06: As you know, time is fleeting in the oral argument setting. [00:17:42] Speaker 06: And here's my question. [00:17:44] Speaker 06: One question I have, please. [00:17:46] Speaker 06: At appendix 108, we have the remand determination by commerce. [00:17:54] Speaker 06: And down at the bottom of 108, commerce is referring to a situation where commission is paid outside the United States. [00:18:06] Speaker 06: And it says, [00:18:09] Speaker 06: Commerce, in this situation, commerce adds U.S. [00:18:12] Speaker 06: commissions incurred outside the United States to normal value of the respective home market sales, and then grants home market commission offsets, if applicable, to normal value of such home market sales. [00:18:30] Speaker 06: Could you just explain, give me an example and explain exactly how that's working? [00:18:36] Speaker 06: I understand what you're saying, but I want to have a clear picture in my mind of exactly what happens there. [00:18:42] Speaker 06: Give me a concrete example. [00:18:44] Speaker 04: So we have a situation where you have a U.S. [00:18:47] Speaker 04: sale where there's a commission incurred outside the United States. [00:18:50] Speaker 04: Commerce puts that in the field. [00:18:51] Speaker 04: They call it U.S. [00:18:52] Speaker 04: Com. [00:18:53] Speaker 04: Then they're comparing that to the normal value. [00:18:56] Speaker 04: So that's the sale they sell it for in their home market. [00:19:00] Speaker 06: The sale of the same product in the home market. [00:19:04] Speaker 06: These big pieces of equipment. [00:19:06] Speaker 04: Yes, these power transformers. [00:19:08] Speaker 04: So you're comparing what they sell it for in the home market to what they sell the same product for in the US. [00:19:14] Speaker 04: That's the goal of the fair comparison under the statute. [00:19:18] Speaker 04: If you have a commission incurred in the home market for normal value on a sale to a customer in the home market, [00:19:25] Speaker 04: the way the commission offsets going to work, you're going to compare the commission they're getting when they sell it to someone in the home market to the commission when they sell it to a U.S. [00:19:33] Speaker 04: customer. [00:19:34] Speaker 06: In other words, the commission they pay in the home market for the sale to a Korean entity. [00:19:40] Speaker 06: Yes. [00:19:42] Speaker 06: Right? [00:19:43] Speaker 06: And then that gets factored in, it's added to [00:19:48] Speaker 06: the normal value in the home market, right? [00:19:50] Speaker 06: And then what's the next step where there's this offset based on the outside U.S.? [00:19:57] Speaker 04: So you have a commission incurred outside the United States for a sale to a U.S. [00:20:00] Speaker 04: customer. [00:20:02] Speaker 04: If the commission on the sale to the U.S. [00:20:04] Speaker 04: customer is less than the commission that they pay for the sales in the home market, that's an offset, but that makes the normal value go higher, which in essence would mean that there'd be more of a dumping margin. [00:20:18] Speaker 04: If the commission for the U.S. [00:20:21] Speaker 04: sale is higher than the commission they're paying on the home market sales, then there's again the home market commission offset, but that makes the normal value go lower, which mathematically would mean the resulting margin would be less. [00:20:35] Speaker 06: What happens, say the commission in Korea in the home market is [00:20:42] Speaker 06: You know, $100,000. [00:20:43] Speaker 06: Okay. [00:20:45] Speaker 06: And that has now increased the normal value, correct? [00:20:50] Speaker 06: Or, yeah, I think that's more or less. [00:20:52] Speaker 06: Now, say the commission paid in the, for the CEP sale, paid outside the United States is $50,000. [00:21:00] Speaker 06: What happens? [00:21:01] Speaker 06: How does it, how does it exactly get factored into this normal value? [00:21:05] Speaker 04: All right. [00:21:05] Speaker 04: So in that case, you're saying that the commission on the U.S. [00:21:09] Speaker 04: sale incurred outside the United States is less than the Home Market Commission? [00:21:13] Speaker 04: Yes. [00:21:13] Speaker 04: Under that situation, there would be a Home Market Commission offset, but it would increase the normal value. [00:21:18] Speaker 04: Why would it increase the normal value? [00:21:21] Speaker 04: Because, again, you're basically comparing, you're trying to make the circumstances of sale adjustment under 1677B, so you're trying to get as accurate a comparison between what sales are like in the home market, what sales are like in the US market. [00:21:36] Speaker 04: And this is how commerce is approaching that mathematically. [00:21:39] Speaker 06: And there would be a formula that would factor in that $50,000 difference. [00:21:42] Speaker 04: Right. [00:21:42] Speaker 04: And they express that through their programming language. [00:21:46] Speaker 04: Now the difference when you have the commission incurred in the U.S. [00:21:48] Speaker 04: market is you're not doing it on the normal value side. [00:21:51] Speaker 04: You're doing it on the U.S. [00:21:52] Speaker 04: side. [00:21:52] Speaker 04: And that's actually directed by statute in 1677B that you deduct the commissions. [00:21:57] Speaker 04: So commerce does not change around [00:22:00] Speaker 04: the amount of adjustment in the home market, which is on the normal value side, because it's not making an adjustment based on economic activities occurring in the home market. [00:22:12] Speaker 04: If the economic activities are occurring in the United States, commerce [00:22:17] Speaker 04: made the decision that you don't then go back and adjust the amount of commission in the home market. [00:22:22] Speaker 04: You're just doing it in your adjustment of U.S. [00:22:25] Speaker 04: price based upon their reading of the statute, based upon their reading of the statement of administrative action, which talks about economic activities occurring in the United States. [00:22:34] Speaker 06: Now, do you agree with Mr. Bond that there were, in this case, certain circumstances of sale adjustment that were made? [00:22:42] Speaker 04: Yes. [00:22:43] Speaker 04: And we would direct the court to the remand. [00:22:47] Speaker 04: The initial final results would go through probably the bulk of those. [00:22:50] Speaker 04: And there's also an issue and decision memorandum associated with those. [00:22:54] Speaker 04: Also, the second amended final results. [00:22:56] Speaker 06: Do you have specific pages in the appendix for that? [00:22:59] Speaker 04: I don't have the sites for the pages. [00:23:00] Speaker 06: But you're saying if we wanted to see what adjustments were made, [00:23:03] Speaker 06: to normal value under the circumstances of sale provision in the statute and the attendant regulation. [00:23:10] Speaker 06: We would go to what again? [00:23:11] Speaker 06: I just want to make sure. [00:23:12] Speaker 04: I would look at the final results, and then the first and second amended final results. [00:23:18] Speaker 04: And then also the issues and decision memorandum for the final results would be the place I would direct the court. [00:23:24] Speaker 04: And also on the remand. [00:23:25] Speaker 04: In this court, this actually is a circumstance of sale adjustment, or at least one being discussed. [00:23:31] Speaker 04: So again, the remand results from the court case, which the court has asked us about during the [00:23:40] Speaker 04: oral argument would be another place to look, but in terms of other ones other than commission offsets, those would be the places I would direct the court. [00:23:51] Speaker 04: Hyundai's argument that the statutes don't express a geographic distinction, yes, they don't express a geographic distinction, but commerce's interpretation was reasonable, and the trial courts [00:24:03] Speaker 04: determination that Congress's determination reasonable is correct for the reasons stated there. [00:24:08] Speaker 04: First, the statement of administrative action speaks very explicitly to economic activities occurring in the United States and the trial court decided that language as well as the preamble to the anti-dumping rules. [00:24:21] Speaker 04: Also, in the section of the statement of administrative action dealing with [00:24:26] Speaker 04: normal value, page 828, as the trial court cites, there is an explicit reference to first economic activities, but also the concerns underlying the statute of avoiding double counting and possible overlap. [00:24:41] Speaker 04: Commerce is employing this technique, only applying the offset when the commissions are incurred outside the United States. [00:24:50] Speaker 04: That was a reasonable interpretation of the statute in light of those provisions. [00:24:56] Speaker 04: Hyundai also talks about 351.410 subsection E, saying, well, it talks about commissions incurred in one market, not the other. [00:25:04] Speaker 04: It doesn't say in what market. [00:25:06] Speaker 04: So then you must have to do the same thing everywhere. [00:25:09] Speaker 04: Again, that's not supported first. [00:25:12] Speaker 04: That regulation was promulgated pursuant to the normal value statute. [00:25:19] Speaker 04: So it's not under the US price statute also. [00:25:24] Speaker 04: The situation you're talking about here at Comar Commission Offset, there are commissions in both markets. [00:25:29] Speaker 04: It's just how commerce chooses to analyze those in order to reach a fair comparison. [00:25:37] Speaker 04: Commerce's determination based upon that analysis was reasonable. [00:25:59] Speaker 04: And... [00:26:05] Speaker 04: As the trial court also noted, the economic activities analysis, that's the kind of thing we have. [00:26:11] Speaker 04: Commerce is charged with analyzing, is whether where the economic activities are occurring, how you determine the effect of that, and how that's expressed through Commerce's programming language. [00:26:21] Speaker 04: That's an expressly methodological decision. [00:26:23] Speaker 04: That is something that Commerce is charged with doing. [00:26:26] Speaker 04: Hyundai has not shown that Commerce's analysis was unreasonable or contrary to the precise language of the statute, such that Commerce's [00:26:34] Speaker 04: Congress's decision was in violation either of Chevron step one or Chevron step two. [00:26:44] Speaker 04: And for those reasons, if the court concludes that it should reach the issue of commission offset, then we respectfully request that the court affirm the decision of the Court of International Trade with respect to that issue. [00:27:04] Speaker 00: Okay, who's to LaBerta? [00:27:29] Speaker 01: on behalf of plaintiff Pele's ABB, from the law firm Kelly Dry and Warren. [00:27:35] Speaker 01: To go straight to the denial of the commission offset, I have to start with the statutory language for the circumstances sale that Hyundai is seeking. [00:27:49] Speaker 01: The language in 1677B6C says make a circumstances sale by increasing or decreasing any difference between export price or constructed price and the normal value price described in 1B of this section. [00:28:10] Speaker 01: So the CEP, the constructed export price is calculated by deducting [00:28:19] Speaker 01: commissions incurred in the U.S. [00:28:21] Speaker 01: first. [00:28:22] Speaker 01: So the CEP that's being compared to normal value no longer has those commissions in it. [00:28:27] Speaker 01: Since there are no commissions still included in the constructed export price, there's no basis on which to make a circumstance to sale adjustment in that instance. [00:28:38] Speaker 01: There are no home market commissions to balance it against. [00:28:43] Speaker 01: It's already taken out of CEP. [00:28:46] Speaker 06: You're saying it's agreed there were no home market commissions in this particular case? [00:28:50] Speaker 01: That's correct. [00:28:52] Speaker 01: That's correct, Your Honor. [00:28:53] Speaker 01: So in calculating CEP in 1677A, [00:29:01] Speaker 01: a D1, commissions are deducted out of the starting price, the U.S. [00:29:08] Speaker 01: starting price, to get your CEP. [00:29:10] Speaker 01: It's no longer there to make a circumstance of sale adjustment against in the statute. [00:29:17] Speaker 01: The regulation that the Commerce Department is reasonably interpreting gets its authority from 1677B. [00:29:26] Speaker 01: It cannot grant a [00:29:30] Speaker 01: a right that the statute didn't give it, which is there must be something in the U.S. [00:29:36] Speaker 01: price against which to offset. [00:29:38] Speaker 01: And it's not there anymore based on the plain language of the statute. [00:29:43] Speaker 01: And then, of course, the statement of administrative action [00:29:50] Speaker 01: draws that distinction to the statement of administrative action for the URAA when the changes were made to the statute in 1996 explicitly talks about distinguishing in the CEP context the economic expenses that are related to economic activity in the United States versus those that are not. [00:30:12] Speaker 01: where you have expenses not related to economic activity in the United States, you go to the circumstance of sale adjustment because you won't have already deducted those in the calculation of CEP. [00:30:25] Speaker 06: Mr. Weber, just one question. [00:30:26] Speaker 06: What would have been the case here? [00:30:27] Speaker 06: We know we had CEP commissions paid in the U.S., correct? [00:30:33] Speaker 06: That's correct. [00:30:34] Speaker 06: And you said there were none paid outside, there were none paid in the home market, Korea. [00:30:39] Speaker 06: Just as a hypothetical, what would have been the situation here if there had also been CEP commissions paid outside the United States as well as those paid inside the United States? [00:30:50] Speaker 06: What would have happened in that case? [00:30:52] Speaker 01: The CEP, the commissions or other CEP expenses that were paid outside the United States would be subject to a circumstance of sale adjustment. [00:31:04] Speaker 01: In the way Mr. Toto was describing for us. [00:31:07] Speaker 01: Yes, they're offsetting for the difference in selling expenses. [00:31:12] Speaker 01: What Mr. Bond has been arguing is that since there are no home market commissions, there were other indirect selling expenses in the home market that should be adjusted for. [00:31:24] Speaker 01: But he's already getting, in the CEP offset, which is a separate offset, he's already getting an adjustment for those CEP selling expenses. [00:31:34] Speaker 01: The indirects in the United States come out of CEP, and the indirects in the home market. [00:31:39] Speaker 01: And that's specifically provided for in a statute. [00:31:41] Speaker 01: So he's getting all the symmetry he needs. [00:31:45] Speaker 00: OK. [00:31:45] Speaker 00: Thank you very much. [00:31:47] Speaker 00: Mr. Bond, you have some rebuttal for him? [00:31:51] Speaker 01: Thank you, Your Honors. [00:32:03] Speaker 05: Thank you. [00:32:03] Speaker 05: I'd like to focus on the commission issue with my remaining two minutes. [00:32:07] Speaker 05: Just two comments. [00:32:08] Speaker 05: First, I think it's very important to focus on the fact that there are two separate issues involved here. [00:32:13] Speaker 05: The first is the treatment of commissions paid on U.S. [00:32:16] Speaker 05: sales under the statute. [00:32:18] Speaker 05: And the statute makes a distinction as to how that adjustment is made based on whether the commission is incurred in the United States or incurred outside of the United States. [00:32:27] Speaker 05: So the entire discussion that we've just heard about whether you deduct it from the CEP, the U.S. [00:32:33] Speaker 05: price, or you make a circumstance of sale adjustment relates to the proper accounting of the commission paid on the U.S. [00:32:40] Speaker 05: sale. [00:32:40] Speaker 05: It tells you absolutely nothing about whether a commission offset should be made with respect to that U.S. [00:32:46] Speaker 05: commission. [00:32:48] Speaker 05: Our point is that a commission offset should be made regardless of whether the U.S. [00:32:52] Speaker 05: commission is incurred inside or outside the United States. [00:32:56] Speaker 05: As Mr. Libera just described, it's perfectly clear that with respect to a CEP sale, where a commission is paid on that U.S. [00:33:03] Speaker 05: sale and it's incurred outside the United States, a commission offset is made for the selling expenses incurred on the domestic sale in the domestic market. [00:33:12] Speaker 05: But inexplicably, the Commerce Department has decided that that very same adjustment won't be made simply in cases where the commission is incurred inside the United States with respect to the very same sale. [00:33:24] Speaker 05: That this distinction as to whether the check is written in Korea for the commission versus the United States is distinguishing whether a commission is offset, whether a commission offset is made for selling expenses incurred in the United States. [00:33:36] Speaker 05: It's a completely arbitrary distinction. [00:33:38] Speaker 05: Particularly in light of the Commerce Department's logic that an offset is required in any case, it's appropriate in any case where commissions are incurred with respect to sales in one market but not the other. [00:33:49] Speaker 05: I would point the court to the six scenarios that we developed in our case brief for further discussion of this point. [00:33:56] Speaker 05: Thank you. [00:34:11] Speaker 02: I'm of course the director tomorrow morning at 10 AM.