Fresh Garlic Producers Ass'n v. United States

The court presumes familiarity with the facts of the case as discussed in FGPA, 121 F.

Supp. 3d at 1317–20; however, the facts relevant to the Remand Results are summarized below

for ease of reference.

To calculate the dumping margin in AD duty cases involving non-market economies

(“NME”), Commerce compares the goods’ normal value,1 derived from factors of production

(“FOP”) as valued in a surrogate market economy, to the goods’ export price.2 19 U.S.C.

§ 1677b(c). By statute, in selecting the surrogate country, Commerce, must use the “best

 1 Normal value is

the price at which the foreign like product is first sold . . . for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the export price or constructed export price,

“at a time reasonably corresponding to the time of the sale used to determine the export price or constructed export price.” 19 U.S.C. § 1677b(a)(1)(A), (B)(i).

2 Export price is “the price at which the subject merchandise is first sold . . . before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States[.]” 19 U.S.C. § 1677a(a).

Consol. Court No. 14-00180 Page 4

available information,” and choose a country “at a level of economic development comparable to

that of the [NME, that is a] . . . significant producer of comparable merchandise.” Id.

For the eighteenth review, covering the period of review (“POR”) from November 1,

2011 through October 31, 2012, Commerce selected Shenzhen Xinboda Industrial Co., Ltd.

(“Xinboda”) and Golden Bird as the mandatory respondents. Initiation of Antidumping and

Countervailing Duty Administrative Reviews and Request for Revocation in Part, 77Fed. Reg.

77,017, 77,020–22 (Dep’t Commerce Dec. 31, 2012). In the Fresh Garlic from the People’s

Republic of China: Final Results and Partial Rescission of the 18th Antidumping Duty

Administrative Review; 2011–2012, 79 Fed. Reg. 36,721, 36,722 (Dep’t Commerce June 30,

2014) (“Final Results”), Commerce selected total adverse facts available3 (“total AFA”) for

Golden Bird and the PRC-wide rate4 of $4.71/kg as Golden Bird’s total AFA rate. Golden Bird

 3 Although neither the statute nor the regulations explicitly use the phrase “total adverse facts available,” the term refers to Commerce’s use of “the facts otherwise available” and “adverse inferences” provisions of 19 U.S.C. § 1677e. Under subsections (a) and (b) of that provision, if the “necessary information is not available on the record,” or certain other similar circumstances are present, Commerce may rely on facts otherwise available, and if Commerce determines that an entity

has failed to cooperate by not acting to the best of its ability to comply with a request for information . . . , [Commerce, in calculating a dumping margin] may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available[.]

Id. § 1677e(a)–(b).

4 In the NME context, Commerce employs a rebuttable presumption of state control whereby a company is assigned the rate applicable to all entities controlled by the government, i.e. a country-wide rate. Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed. Cir. 1997). Here, the country-wide rate is the PRC-wide rate. According to Commerce’s procedures, to receive a non-country-wide rate, a company must file a separate rate certification indicating that it is de jure and de facto independent of government control. Id.

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appealed, and the court upheld Commerce’s decision to select total AFA for Golden Bird.

FGPA, 121 F. Supp. 3d at 1320, 1327. The court, however, rejected Commerce’s selection of

the PRC-wide rate as Golden Bird’s total AFA rate because Commerce had failed to make a

finding that Golden Bird’s separate rate certification was deficient or unreliable. Id. at 1328.

On remand, Commerce found, under protest, Golden Bird eligible for a separate rate.

Remand Results at 14. Commerce reiterated its position that “the severity of Golden Bird’s

failure to cooperate and the centrality of the deficient response to the calculation of a dumping

margin” sufficiently call into question the integrity of Golden Bird’s information regarding its

operation as a separate entity. Id. at 15 (quoting FGPA, 121 F. Supp. 3d at 1326). Commerce,

however, refused to make a specific finding regarding the deficiency of Golden Bird’s separate

rate information because it reasoned that such a finding could be reached only by “follow[ing]

the same logic that the Department applied [previously] and [which] the Court rejected.” Id. at

16. Commerce ultimately assigned Golden Bird a total AFA rate of $2.24/kg. Id. at 6. That

margin represents Xinboda’s highest transaction-specific margin from the instant review.

Commerce selected such a rate by reasoning that “Golden Bird should ‘not obtain a more

favorable result by failing to cooperate than if it had cooperated fully.’” Id. (quoting Uruguay

Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316, vol. 1, at

870 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4199 (“SAA”)).

Golden Bird does not object to the assignment of a total AFA rate based on Xinboda’s

highest transaction-specific margin from the POR. Cmts. on Commerce Dep’t’s Final Results of

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Redetermination Pursuant to Remand 3, ECF No. 90 (“Golden Bird & QXF Cmts.”).5 The Fresh

Garlic Producers Association, Christopher Ranch L.L.C., The Garlic Company, Valley Garlic,

and Vessey and Company, Inc. (collectively, “FGPA”) do oppose Commerce’s separate rate

determination in the Remand Results. Pls.’ Cmts. on Dep’t’s Redetermination Pursuant to Ct.

Order 2, ECF No. 91 (“FGPA Cmts.”). FGPA argues that Golden Bird’s separate rate

certification suffers from some of the same deficiencies as the sales information, namely that the

same individual attests to the accuracy of both sets of documents. Id. at 2, attach. 1 at 2–3.

Accordingly, FGPA reiterates its previous arguments supporting the assignment of the PRC-wide

rate as Golden Bird’s total AFA rate. Id. at 3, attach. 1 at 11–14.

In the Final Results, Commerce also selected the Philippines as the surrogate country for

calculating FOPs. Issues and Decision Memorandum for the Final Results of Antidumping Duty

Administrative Review: Fresh Garlic from the People’s Republic of China; 2011–2012

Administrative Review at 5–10, A-570-831, (June 23, 2014), available at

http://enforcement.trade.gov/frn/summary/prc/2014-15279-1.pdf (last visited June 30, 2016)

(“I&D Memo”). On initial appeal, Jinan Farmlady Trading Co., Ltd., Qingdao Xintianfeng

Foods Co., Ltd., Shenzhen Bainong Co., Ltd., Jining Yifa Garlic Produce Co., Ltd., Weifang

Hongqiao International Logistics Co., Ltd., Yantai Jinyan Trading, Inc. (collectively, “QXF”),

 5 Golden Bird merely asks, based on the surrogate country issue, that if Xinboda’s highest transaction-specific rate changes, Golden Bird’s rate change accordingly. Golden Bird & QXF Cmts. at 3. In addition, Jinan Farmlady Trading Co., Ltd., Qingdao Xintianfeng Foods Co., Ltd., Shenzhen Bainong Co., Ltd., Jining Yifa Garlic Produce Co., Ltd., Weifang Hongqiao International Logistics Co., Ltd., Yantai Jinyan Trading, Inc. (collectively, “QXF”) all submitted comments on the remand results in conjunction with Golden Bird. Accordingly, the court will refer to those comments as “Golden Bird & QXF Cmts.” The court also notes that Shijiazhuang Goodman Trading Co., Ltd., indicated that it was withdrawing from the action and not was not submitting comments on the Remand Results. See generally Golden Bird & QXF Cmts.

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and Xinboda challenged Commerce’s choice of the Philippines as the surrogate country, arguing

that the Philippines is not a significant producer of fresh garlic and that the Philippine data was

not the best available information. FGPA, 121 F. Supp. 3d at 1336. In response, Commerce

explained that the Philippines is a significant producer because the Philippines had a “noticeably

or measurabl[y] large” amount of fresh garlic production during the POR. See I&D Memo at 8

n.22. Commerce deviated from its typical significant producer analysis where it takes into

account “world production . . . and trade.” Policy Bulletin 04.1, Non–Market Economy

Surrogate Country Selection Process (Mar. 1, 2004), available at http://enforcement.trade.gov/

policy/bull04-1.html (last visited June 30, 2016) (“Policy Bulletin 04.1”)6 (“[A] judgement [sic]

should be made consistent with the characteristics of world production . . . and trade. . . .”); see

Dupont Teijin Films v. United States, 997 F. Supp. 2d 1338, 1342 (CIT 2014) (“Commerce

assesses the output of the potential surrogate country in relation to world production and trade in

comparable merchandise.”); Shandong Rongxin Imp. & Exp. Co. v. United States, 774 F. Supp.

2d 1307, 1316 (CIT 2011) (defining “significant” as “having or likely to have influence or

effect”), aff’d sub nom., China First Pencil Co. v. United States, 466 F. App’x 881 (Fed. Cir.

2012). Commerce explained that such deviation was warranted given world garlic market

conditions and the dominance of the PRC’s production. FGPA, 121 F. Supp. 3d at 1339. The

court held that because there was no comparative aspect to Commerce’s analysis, Commerce had

 6 This bulletin is a compilation of the International Trade Administration’s guidelines for AD investigations and administrative reviews. Though not binding authority, courts, including this one, view this bulletin as indicative of Commerce’s best practices and Commerce’s statutory interpretation for reviews of AD duty orders. See, e.g., DuPont Teijin Films v. United States, 997 F. Supp. 2d 1338, 1342–45 (CIT 2014); Foshan Shunde Yongjian Housewares & Hardwares Co. v. United States, 896 F. Supp. 2d 1313, 1320–23 (CIT 2013).

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improperly determined that “any commercially meaningful production” was significant. Id.; see

Policy Bulletin 04.1 (permitting “any commercially meaningful production” to be significant

when, for example, only three countries produce the goods in question).

The court instructed Commerce “to reconsider its surrogate country selection.” FGPA,

121 F. Supp. 3d at 1342. The court further held that because the selection of the Philippines was

unsupported by substantial evidence, the court did not need to address specific challenges to the

Philippine data, such as the use of net weights, adjustments to the import statistics, or whether

the Philippines provided the best quality data. Id. at 1340. The court, however, suggested that

should Commerce continue to rely on the Philippines, Commerce should “take a fresh look at its

use of net weights and adjustments to import statistics and provide clear explanation for its

decisions.” Id. at 1342 n.21.

On remand, Commerce did not reconsider its surrogate country selection, but rather,

attempted to further explain its original rationale. Commerce again noted that the dictionary

definition of “significant” includes “a noticeably or measurably large amount.” Remand Results

at 9. Commerce then determined that “the production level of 9,056 [metric tons] of garlic was

significant because that amount was ‘noticeably or measurably large’ enough to reasonably

assume that the data reflect transactions among buyers and suppliers in a normal marketplace.”

Id. Once more, Commerce emphasized the “paucity of candidates to serve as surrogate market

economy countries” to justify its conclusion that its typical definition of significant producer was

inappropriate. Id. Although Commerce “disagree[d] with the court that there is an inherent

‘comparative aspect of the significant producer analysis,’” Commerce tried to explain how a

comparative analysis also supports the selection of the Philippines. Id. at 11 (quoting FGPA, 121

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F. Supp. 3d at 1340). Excluding the PRC, of the ninety-five countries that produced fresh garlic

in 2011, the Philippines ranked forty-third, meaning it was in the top half of all producers, and

thus, according to Commerce, comparatively significant. Id.

In their comments on the Remand Results, Xinboda, QXF, and Golden Bird (collectively

“Respondents”) contest the use of the Philippines as the surrogate country on the grounds that it

is not a significant producer, its data is not reliable, and Commerce incorrectly used the available

data. Golden Bird & QXF Cmts. at 3–7; Consol. Pl. Shenzhen Xinboda Indus. Co., Ltd. Cmts.

on U.S. Dep’t of Commerce Remand Redetermination 2–19, ECF No. 92 (“Xinboda Cmts.”).

Xinboda contends that Commerce failed to comply with the court’s order to further explain the

selection of the Philippines, asserting that Commerce’s “half-hearted comparative analysis

makes no sense.” Xinboda Cmts. at 12. Xinboda specifically argues that Commerce’s

comparative analysis overlooked the fact that, even after excluding India’s and the PRC’s

production, the Philippines “still only produces 0.26 percent of the remaining garlic

production.”7 Id. Moreover, Xinboda argues that by Commerce’s own admission, Commerce

assumed that Philippine data “reflect[ed] transactions . . . in a normal marketplace” and that

several factors make the Philippines an abnormal market. Id. at 6–7 (quoting Remand Results at

9).8 QXF specifically argues that the differences in the production levels of the Philippines and

 7 Xinboda, citing Ad Hoc Shrimp Trade Action Comm. v. United States, 882 F. Supp. 2d 1366 (CIT 2012), first repeats its argument that Commerce’s sequential analysis (where it first examines economically comparability) is legally flawed. Xinboda Cmts. at 5–6. As noted in FGPA, Commerce’s sequential approach was not impermissible as an initial approach. 121 F. Supp. 3d. at 1336.

8 FGPA did not comment on Commerce’s continued selection of the Philippines as the surrogate country. FGPA Cmts. at 3 n.2.

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the PRC and resulting differences in economies of scale render any comparison between export

price and normal value not a “fair comparison” in contravention of the statute. Golden Bird &

QXF Cmts. at 4. Instead, QXF argues that by looking at per capita fresh garlic production it is

apparent that the Philippines is not a significant producer. 9 Id. at 4–5.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). Commerce’s final results in

an administrative review of an AD duty order are upheld unless they are “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i).

DISCUSSION

I. Golden Bird’s Total AFA Rate

On remand, Commerce was not able to identify any “deficiencies in Golden Bird’s

[separate rate certification] or Section A responses specific to government control of its export

activities[.]” Remand Results at 14–15. Accordingly, in compliance with the court’s order and

because Commerce was unable to point to any relevant record evidence related to government

control, Commerce properly determined Golden Bird to be eligible for a separate rate. See id. at

14–17. FGPA contends that Commerce should have found Golden Bird’s separate rate

 9 QXF also argues that Commerce failed to articulate “particular, specific and objective evidence” on the record to support excluding or adjusting certain parts of the Philippine import statistics. Golden Bird & QXF Cmts. at 6. (citing China Nat’l Mach. Imp. & Exp. Corp. v. United States, 27 CIT 255, 266–67, 264 F. Supp. 2d 1229, 1239–40 (2003), aff’d 104 F. App’x 183 (Fed. Cir. 2004)); see also Mem. in Supp. of Pls.’ Mot. for J. on the Agency R. 10–12, ECF No. 32 (challenging generally the adjustments to Philippine data). Finally, Respondents also challenge Commerce’s rationale for using gross values, but net (rather than gross) weights in calculating surrogate values. Golden Bird & QXF Cmts. at 6–7; Xinboda Cmts. at 15–19.

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information deficient, essentially reiterating its prior position that Golden Bird should be

assigned the PRC-wide rate. FGPA Cmts. at 3, attach.1 at 7–11. As Commerce correctly notes,

FGPA’s line of reasoning “largely mirror[s]” Commerce’s argument in the original I&D Memo,

Def.’s Resp. to Cmts. Regarding Remand Redetermination 7, ECF No. 96 (“Gov’t Resp.”),

which the court previously rejected, FGPA, 121 F. Supp. 3d at 1325–27, and declines to

reconsider. The evidence on the record calls into question only sales information, and

“Commerce cannot ignore a party’s separate rate information solely because it selects AFA due

to defects related to sales data.” Id. at 1328.10 Accordingly, Commerce’s determination that

Golden Bird is entitled to a separate rate is sustained.

Commerce assigned Golden Bird a separate rate of $2.24/kg, which is the highest rate of

any Xinboda transaction during the POR. Remand Results at 6. Normally, when calculating a

separate rate, “accuracy and fairness must be Commerce’s primary objectives.” Albermarle

Corp. & Subsidiaries v. United States, Nos. 2015-1288, 2015-1289, 2015-1290, 2016 WL

1730359, at *6 (Fed. Cir. May 2, 2016). In selecting an AFA rate, however, “Commerce must

balance the statutory objectives of finding an accurate margin and inducing compliance, rather

than creating an overly punitive result.” Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed.

Cir. 2004).

 10 Additionally this is not a case where Commerce made a determination that directly related to a party’s responses about government control and the veracity of information related to separate rate eligibility, such as where it concerned that party’s alleged corporate affiliations, see Ad Hoc Shrimp Action Committee v. United States, 802 F.3d 1339, 1355–57 (Fed. Cir. 2015) (affirming application of country-wide rate as an AFA rate where unreliable responses concerned a respondent’s corporate affiliations), or where Commerce made a finding of fraud on the proceedings, see Chang Tieh Industry Co. v. United States, 17 CIT 1314, 1318, 840 F. Supp. 141, 146 (1993) (acknowledging that Commerce has authority to prevent fraud upon its proceedings).

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Recently, the Federal Circuit affirmed Commerce’s use of one mandatory respondent’s

highest transaction-specific margin from the relevant POR as a total AFA rate for another

mandatory respondent. Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1345 (Fed. Cir.

2016) (“Nan Ya”).11 In the instant case, Commerce based Golden Bird’s total AFA rate on

Xinboda’s highest-transaction rate, reasoning that “Golden Bird should ‘not obtain a more

favorable result by failing to cooperate than if it had cooperated fully.’” Remand Results at 6

(quoting SAA, H.R. Doc. 103-316 Vol. 1 at 870, 1994 U.S.C.C.A.N. at 4199). Commerce also

determined that the underlying sale was “non-aberrational.” Id. None of the parties have

challenged the rate as aberrational.12 When compared to Xinboda’s non-AFA rate, Golden

 11 The court notes that Nan Ya appears to question prior Federal Circuit precedent. As the opinion was not rendered en banc, however, the court presumes that Nan Ya is to be interpreted consistently with other Federal Circuit precedent, so that clearly aberrational rates are not to be sustained. Reasonable choices are required.

12 The court has previously remanded at least one case where Commerce, relying on primary information, failed to demonstrate that a separate AFA rate was “a reasonably accurate estimate of the respondent’s actual rate” and was not aberrational. Dongguan Sunrise Furniture Co. v. United States, 931 F. Supp. 2d 1346, 1352–54 (CIT 2013) (remanding where Commerce calculated a partial AFA rate for a mandatory respondent from the respondent’s own POR data, but based the rate only on a small number of individual transactions “[w]ithout a rational explanation linking the chosen AFA rates to [the respondent’s] actual rate”). In that case, however, Commerce selected only partial AFA. Thus, Dongguan was not “a total AFA case where the record [was] devoid of all [trustworthy] sales data” for the respondent. Dongguan Sunrise Furniture Co. v. United States, 865 F. Supp. 2d 1216, 1234 (CIT 2012)

Here, Golden Bird’s previous two separate rates were $0.14/kg in the sixteenth administrative review and de minimis in the seventeenth review. Fresh Garlic from the People’s Republic of China: Final Results of Antidumping Duty Administrative Review; 2010–2011, 78 Fed. Reg. 36,168, 36,169 (Dep’t Commerce June 17, 2013) (seventeenth administrative review); Fresh Garlic from the People’s Republic of China: Final Results of the 2009–2010 Administrative Review of the Antidumping Duty Order, 77 Fed. Reg. 34,346, 34,348 (Dep’t Commerce June 11, 2012) (sixteenth administrative review). Xinboda’s rate for this POR also significantly increased from de minimis in the prior review to $1.82/kg, which indicates that (continued . . .)

Consol. Court No. 14-00180 Page 13

Bird’s assigned total AFA rate, which is only 23% greater, does not appear to be aberrational or

unreasonable, especially given Commerce’s deterrence objective. Thus, based on the record as it

stands now Commerce’s selection of Xinboda’s highest transaction-specific, non-aberrational

rate from the POR as Golden Bird’s total AFA rate is permissible.13

II. Surrogate Country Selection

On remand, Commerce has not revised its selection of the Philippines as the surrogate

country for valuing the FOPs during the POR. Rather than conducting a meaningful comparative

analysis to explain why the Philippines’ seemingly meager production is significant, as the court

instructed, Commerce simply stated in the Remand Results that the Philippines ranks forty-third

out of the ninety-five countries which produced fresh garlic during the POR (excluding the

PRC). Id. at 11. A mid-range rank in a list of countries with insignificant production does not

make the Philippines a significant producer overall. Such “further explanation” is insufficient

and the court once again holds that Commerce’s selection of the Philippines is not supported by

substantial evidence.

By statute, when selecting a surrogate country, Commerce “shall utilize, to the extent

possible, the prices or costs of [FOPs] in one or more market economy countries that are . . .

significant producers of comparable merchandise.” 19 U.S.C. § 1677b(c)(4). As discussed in

 market conditions and the change in surrogate country account for a substantial portion of the large increase from Golden Bird’s recent past rates.

13 The court assumes that, even if a new primary surrogate country is selected, Commerce will continue to use one or more of Xinboda’s high margin transactions as the AFA margin for Golden Bird. If so, in assigning an AFA rate to Golden Bird and bearing in mind the statutory goals of deterrence and reasonable accuracy, Commerce should consider resulting changes to any such of Xinboda’s high margin transactions, due to either the revised surrogate country selection or otherwise. 

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the court’s prior opinion, “significant producer ‘is not statutorily defined, and is inherently

ambiguous.’” FGPA, 121 F. Supp. 3d at 1338 (quoting Shandong Rongxin, 774 F. Supp. 2d at

1316). Under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–43

(1989), to determine whether Commerce’s interpretation of the AD statute is entitled to

deference the court conducts a two-part test. Where Congress has spoken directly to the question

at issue, the court and Commerce must give effect to the unambiguously expressed intent of

Congress. See id. If, however, the statute is vague or silent on an issue, as it is here, the court

upholds Commerce’s interpretation so long as the interpretation is reasonable. See id. at 843;

DuPont Teijin Films USA, LP v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005). Because

the statute is ambiguous as to significant producer, the court must determine whether

Commerce’s definition of significant producer is “based on a permissible construction of the

statute.” Shandong Rongxin, 774 F. Supp. 2d at 1316 (quoting Chevron, 467 U.S. at 843).

In its prior opinion, the court held that Commerce’s definition for this case of “significant

producer” as one whose production is “noticeably or measurably large” was not a permissible

construction of the statute because it did not include a comparative aspect linking the volume to

industry conditions. FGPA, 121 F. Supp. 3d at 1340. Commerce’s interpretation thus did not

comport with the statute’s directive to derive reasonable FOPs from a market economy to use to

determine hypothetical prices in the NME.14 See Shandong Rongxin, 774 F. Supp. 2d at 1309

 14 The court previously determined that Commerce’s deviation from its typical straightforward significant producer analysis, consisting of evaluating a potential surrogate country’s production as a percentage of world production and trade was permissible based on the unique circumstances of the fresh garlic industry. Commerce, however, was required to devise some standard and support its selection of the Philippines or another country with substantial evidence and it has failed to do so. 

Consol. Court No. 14-00180 Page 15

(“The purpose of [19 U.S.C. § 1677b(c)] is ‘to assess the price or costs of [FOPs] of the subject

merchandise in a surrogate market economy country, in an attempt to construct a hypothetical

market value of that product in the [NME] country.’” (alterations omitted) (quoting Nation Ford

Chem. Co. v. United States, 166 F.3d 1373, 1375 (Fed. Cir. 1999)). On remand, Commerce’s

comparative analysis consisted of conclusory reasoning where Commerce explained that the

Philippines was in the top half of world producers. Such superficial analysis does not address

the court’s concern that using the Philippines, whose production is minimal, might create an

unreasonable basis for FOPs in the PRC where there are undoubtedly significant economies of

scale. For example, if there were five producers of a good and the largest producer produced a

hundred pounds of the good, the second largest produced ninety-seven, the third produced three,

the fourth producer two, and the fifth produced one, it cannot reasonably be maintained that the

third producer is “significant.” Commerce’s “comparative analysis” thus adds nothing and does not aid the court in determining whether the Philippines is a significant producer.15 Determining

that because the Philippines is in the top half of fresh garlic producers it is a significant producer

is arbitrary and unreasonable. Commerce has failed to comply with the court’s instruction, and

the court, once again, is forced to conclude that Commerce’s determination is unsupported by

substantial evidence.

 15 Conversely, the court notes that given the available data and lack thereof, it could be reasonable for Commerce to look at the mean of fresh garlic production among the non-PRC producers, which would be approximately 529,000 metric tons. See Golden Bird’s Submission of Surrogate Country Selection Cmts. and Surrogate Value Info. at Ex. 1, PD 110–15 (June 26, 2013). India’s production exceeds that mean. See id. Excluding both the PRC’s and India’s production results in a mean of approximately 148,000 metric tons and yields eight additional countries producing more than the resulting mean. See id.

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Next, Commerce’s conclusion that the Philippine production was significant irrespective

of any comparative analysis is unsupported. Simply because nine million metric tons is a large

number in the abstract, does not mean that such level of production is significant. Also, whether

such level of production can be assumed to create reliable market-based transaction information

again depends on the industry and, as described below, given the small production in the

Philippines, such an assumption is unsupported by substantial evidence. Further, the court is

unpersuaded by Commerce’s rationale that the “paucity of candidates” make its selection of the

Philippines supported by substantial evidence. Commerce created the situation where there were

a paucity of candidates by limiting the number of economically comparable countries on the

surrogate country list.16 It cannot now cite that paucity as a reason requiring a flexible

interpretation of significant producer to essentially render that criterion meaningless.

Moreover, this is not a situation where there are no significant producers besides the

NME. India produces nearly 5% of the world’s fresh garlic and excluding fresh garlic produced

in the PRC, India represents 23.5% of the market. See Golden Bird’s Submission of Surrogate

Country Selection Cmts. and Surrogate Value Info. at Ex. 1, PD 110–15 (June 26, 2013)

 16 Additionally, in at least one prior case, the court has sustained a determination by Commerce selecting a surrogate country that was not on the original surrogate country list of economically comparable countries. See An Giang Fisheries Imp. & Exp. Joint Stock Co. v. United States, Slip Op. 16-55, 2016 WL 3369235, at *8 (CIT June 7, 2016). In that case, Commerce explained that the surrogate country list is simply a list of countries at the same level of economic development as the NME in question, but that it is not exhaustive and there may be other countries which are also economically comparable to the NME. See id. at *3, *5. In sustaining Commerce’s determination, the court stated, “[w]hile Commerce acknowledged that Indonesia is less economically comparable to Vietnam as compared to the countries on the [surrogate country list], Commerce reasonably concluded that data considerations . . . outweigh the fact that Indonesia is not at the same level of economic development as Vietnam.” Id. at *8 (internal quotation marks omitted). Commerce has not explained why significant producer considerations may not similarly outweigh differences in economic comparability.

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(“Golden Bird’s SV Info.”). Additionally, there are four counties who produce at least 5% of the

fresh garlic production when the PRC’s production is excluded. See id. Thus, contrary to the

government’s argument, the production excluding the PRC is not evenly divided. The

Philippines, which represents only 0.2% of production excluding the PRC’s production, is a

small producer, and Commerce has said nothing which could somehow render such data suitable

for a fair comparison between export price and normal value. Further, when the PRC is

excluded, the remaining top nine producers each represent almost 4% of the market and together

make up more than 63% of the market. Policy Bulletin 4.01 indicates that where there are ten

large producers and a variety of small producers, “‘significant producer’ could be interpreted to

mean one of the top ten.” Thus, Commerce has not established that this is a case requiring the

selection of a surrogate country which is not a significant producer because there are other

potential surrogate countries which are significant producers.

In ordinary cases, Commerce’s multi-part surrogate selection process should result in a

usable surrogate country. When, as here, however, the countries on the economically

comparable list may not be significant producers and the significant producers are not on the

economically comparable country list, Commerce must utilize a reasonable methodology to

select a surrogate country or countries. Cf. An Giang Fisheries Imp. & Exp. Joint Stock Co. v.

United States, Slip Op. 16-55, 2016 WL 3369235, at *8 (CIT June 7, 2016); see also Policy

Bulletin 04.1. Commerce has a duty to act reasonably and should bear in mind the purpose of

the surrogate country section of the statute, namely to identify reliable market-based prices upon

which to value an NME producer’s FOPs to conduct a fair comparison between normal value

and export price. See 19 U.S.C. § 1677b(a) (“In determining under this subtitle whether subject

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merchandise is being, or is likely to be, sold at less than fair value, a fair comparison shall be

made between the export price or constructed export price and normal value.”); Shakeproof

Assembly Components, Div. of Ill. Tool Works, Inc. v. United States, 268 F.3d 1376, 1382 (Fed.

Cir. 2001) (“In determining the valuation of the [FOP], the critical question is whether the

methodology used by Commerce is based on the best available information and establishes

antidumping margins as accurately as possible.”). Commerce’s methodology here, determining

that any producer with a measurable amount of production that is above the median of world

producers, is not reasonable and provides no assurance that reasonably accurate margins will

result.

It may be that the only significant producer is not “economically comparable,” as defined

by Commerce, however, Commerce must construct a reasonable method of selecting a surrogate

country when the significant producers are not closely economically comparable and the chosen

economically comparable countries may not be significant producers. It has not done so in this

review. Simply because it is difficult, or may require adjusting surrogate values, or using

multiple surrogate countries does not mean that Commerce may select a surrogate country which

is not a significant producer. Commerce is to meaningfully evaluate the statutory directive and

come up with a method that addresses the statute’s goals while balancing the statutory factors to

use the best available information. Commerce’s half-hearted attempt to comply with the court’s

order requiring a comparative aspect to the significant producer analysis does not persuade the

court that substantial evidence supports Commerce’s determination. Commerce has not

explained why the gains achieved in selecting a more economically comparable surrogate

country are infinitely greater than the loss of not selecting a truly significant producer of subject

Consol. Court No. 14-00180 Page 19

merchandise. The court is persuaded by the reasoning in Ad Hoc Shrimp Trade Action

Committee v. United States, 882 F. Supp. 2d 1366, 1374 (CIT 2012) (“Ad Hoc Shrimp I”),

where it stated that “none of the three surrogate country eligibility criteria––economic

comparability, significant production of comparable merchandise, and quality data––is

preeminent.”17 Here, Commerce has arbitrarily discounted the value of significant production.

See id. It has created a broad test for significant producer and apparently a narrow test for

economic comparability. Accordingly, the court remands this matter to Commerce to address

surrogate country selection.18