# Dorbest Ltd. v. United States > United States Court of International Trade · October 31, 2006 · 462 F. Supp. 2d 1262 URL: https://www.frixlaw.com/law-library/cases/818337 ## Case - **Full name:** DORBEST LTD.; Rui Feng Woodwork (Dongguan) Co. Ltd.; Rui Feng Lumber Dev. (Shenzhen) Co. Ltd., and Am. Furniture Mfrs. Comm. for Legal Trade; Vaughan-Bassett Furniture Co. Inc.; Cabinet Makers, Millmen, & Indus. Carpenters Local 721; UBC S. Council of Indus. Workers Local 2305; United Steel Workers of Am. Local 193U; Carpenters Indus. Union Local 2093; Teamsters, Chauffeurs, Warehousemen & Helpers Local 991; IUE Indus. Div. of CWA Local 82472, Plaintiffs/Defendant-Intervenors, v. UNITED STATES, Defendant, Dongguan Lung Dong/Don He Art Heritage Int’l, Ltd/Super Art Furniture Co./Artowrk Metal & Plastic Co./Jibson Indus. Ltd./Always Loyal Int’l; Fortune Glory Ltd. (HK Ltd.)/ Nanhai Jiantai Woodwork Co.; Fine Furniture (Shanghai) Ltd.; Coaster Co. of Am.; Collezione Europa, USA, Inc.; Fine Furniture Design & Mktg. LLC; Global Furniture, Inc., Hillsdale Furniture, LLC; Klaussner Int’l, LLC; Magnussen Home Furnishings Inc.; L. Powell Co.; Riversedge Furniture Co.; Woodstuff Mfg. Inc., D/B/A Samuel Lawrence; Schnadig Corp.; Good Cos.; Standard Furniture Mfg. Co., Defendant-Intervenors - **Court:** United States Court of International Trade - **Decided:** October 31, 2006 - **Citations:** 462 F. Supp. 2d 1262; 30 Ct. Int'l Trade 1671; 30 C.I.T. 1671; 28 I.T.R.D. (BNA) 2421; 2006 Ct. Intl. Trade LEXIS 162 - **Precedential status:** Published - **Opinion:** Opinion by Pogue - **Judges:** Pogue - **Cited by:** 81 later opinions in the Frix Law Library ## Citator (automated) - **Red flag:** Reversed on other grounds by Dorbest Ltd. v. United States, 604 F.3d 1363 (2010). - Negative treatments: 1 - Distinguished by: 0 - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/818337 ## How later opinions describe it (automated extraction) - explaining that, e.g., “[r]egardless of whether or not Commerce finds it appropriate to use Info-drive India data to value mirrors, the Info-drive India data can prove to be illuminating as to the nature of the product actually being valued within a specific ... [tariff] subhe… - explaining that, e.g., “[r]egardless of whether or not Commerce finds it appropriate to use Infodrive India data to value mirrors, the Infodrive India data can prove to be illuminating as to the nature of the product actually being valued within a specific ... [tariff] subhead… - explaining that, e.g., "[Regardless of whether or not Commerce finds it appropriate to use Infodrive India data to value mirrors, the Infodrive India can prove to be illuminating as to the nature of the product actually being valued within a specific ... [tariff] subheading” - explaining that when “Commerce is faced with a choice between two imperfect options, it is within Commerce's discretion to determine which choice represents the best available information” - noting that AFMC, for example, had argued that changing the data set would create “distortions and results that are less reliable than Commerce's existing methodology'' as a result of the fact that Commerce’s (initial) data set of 56 countries lead to an adjusted R square of 0… ## Opinion text Slip-Op. 06-160 UNITED STATES COURT OF INTERNATIONAL TRADE - - - - - - - - - - - - - - - -- -x DORBEST LTD.; RUI FENG WOODWORK : (DONGGUAN) CO. LTD.; RUI FENG : LUMBER DEV. (SHENZHEN) CO. LTD., : : and : : AM. FURNITURE MFRS. COMM. FOR : LEGAL TRADE; VAUGHAN-BASSETT : FURNITURE CO. INC.; CABINET : MAKERS, MILLMEN, & INDUS. : CARPENTERS LOCAL 721; UBC S. : COUNCIL OF INDUS. WORKERS LOCAL : 2305; UNITED STEEL WORKERS OF AM. : LOCAL 193U; CARPENTERS INDUS. : UNION LOCAL 2093; TEAMSTERS, : CHAUFFEURS,WAREHOUSEMEN & HELPERS : LOCAL 991; IUE INDUS. DIV. OF CWA : LOCAL 82472 : : Plaintiffs/Defendant- : Intervenors, : : v. : Before: Pogue, Judge : Consol. Ct. No. 05-00003 UNITED STATES, : : Defendant, : : DONGGUAN LUNG DONG/DON HE : ART HERITAGE INT’L, LTD/SUPER ART : FURNITURE CO./ARTOWRK METAL & : PLASTIC CO./JIBSON INDUS. LTD./ : ALWAYS LOYAL INT’L; FORTUNE GLORY : LTD. (HK LTD.)/ NANHAI JIANTAI : WOODWORK CO.; FINE FURNITURE : (SHANGHAI) LTD.; COASTER CO. OF : AM.; COLLEZIONE EUROPA, USA, : INC.; FINE FURNITURE DESIGN & : MKTG. LLC; GLOBAL FURNITURE, INC.,: HILLSDALE FURNITURE, LLC; : KLAUSSNER INT’L, LLC; MAGNUSSEN : HOME FURNISHINGS INC.; : L. POWELL CO.; RIVERSEDGE : FURNITURE CO.; WOODSTUFF MFG. : INC., D/B/A SAMUEL LAWRENCE; : SCHNADIG CORP.; GOOD COS.; : STANDARD FURNITURE MFG. CO. : : Defendant-Intervenors. : - - - - - - - - - - - - - - - ----x [Commerce’s determination sustained in part and remanded in part]. Consolidated Ct. No. 05-00003 Page 2 Kaye Scholer, LLP (Jeffrey S. Grimson, Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Jahna M. Hartwig) for Dorbest Limited et al.; King & Spalding, LLP (Joseph W. Dorn, Stephen A. Jones, Jeffrey M. Telep, J. Michael Taylor) for the American Furniture Manufacturers Committee for Legal Trade et al.; Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Brian A. Mizoguchi, Michael D. Panzera); Rachel Wenthold and Carrie L. Owens, Attorneys, Of Counsel, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for the United States Department of Commerce; Mowry International Group, LLC (Jill Cramer and Kristin H. Mowry) on behalf of Art Heritage International, Limited et al.; and Trade Pacific, PLLC (Robert G. Gosselink) on behalf of Dongguan Lung Dong/Dong He et al. OPINION Decided: October 31, 2006 POGUE, Judge: This matter arises from an affirmative antidumping duty determination by the Department of Commerce (“Commerce”) in its investigation of wooden bedroom furniture from the People’s Republic of China (“PRC”). Plaintiffs challenge numerous aspects of that determination here. Before the court are USCIT R. 56.2 Motions for Judgment on the Agency Record filed by the parties, specifically by Dorbest Limited et al (“Dorbest” also known as “Respondents”), the American Furniture Manufacturers Committee for Legal Trade et al. (“AFMC” also the “Petitioners” in the investigation), and Commerce. For the reasons set forth below, the court grants in part each of Consolidated Ct. No. 05-00003 Page 3 these motions and denies in part each of these motions; the court also reserves decision on several issues pending the results on remand. BACKGROUND A. On December 17, 2003, Commerce commenced an antidumping investigation of wooden bedroom furniture from the PRC in response to a petition filed by the domestic industry. See Wooden Bedroom Furniture from the People’s Republic of China, 68 Fed. Reg. 70,228 (Dep’t Commerce Dec. 17, 2003) (initiation of antidumping duty investigation).1 The investigation covered more than 211 Chinese 1 In investigations of merchandise produced in non-market economies (“NMEs”), if the “prices of the goods produced in an NME are subject to discrepancies which distort their value,” Magnesium Corp. of Am. v. United States, 20 CIT 1092, 1095, 938 F. Supp. 885, 890 (1996), the antidumping statute authorizes Commerce to approximate normal value based on the cost of producing the foreign merchandise (with a margin of profit factored in), see 19 U.S.C. § 1677b(c)(2000). To value these factors of production and profit, Commerce must use the “best available” pricing and cost data for the factors of production taken from “surrogate” economies/companies. Id. Antidumping investigations are bifurcated between Commerce and the International Trade Commission (“ITC”). The ITC makes injury determinations and Commerce makes less-than-fair value ("LTFV") determinations. If the ITC determines that a domestic industry is materially injured or is threatened with material injury and Commerce determines that the merchandise is being sold at LTFV, Commerce issues an antidumping order directing the United States Customs Service to collect antidumping duties “equal to the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise.” 19 U.S.C. § 1673 (2000). The “export price” or “constructed export price” is the price at which the subject merchandise is sold in (continued...) Consolidated Ct. No. 05-00003 Page 4 exporters/producers of wooden bedroom furniture making this one of the largest investigations involving PRC companies. See Wooden Bedroom Furniture from the People's Republic of China, 69 Fed. Reg. 35,312, 35,313 (Dep’t Commerce June 24, 2004) (notice of preliminary determination and postponement of final determination) (“Preliminary Determination”). The period of investigation (“Period of Investigation” or “POI”) encompassed imports of the subject merchandise from April 1, 2003 through September 30, 2003. Commerce rendered an affirmative less than fair value determination for the subject merchandise and imposed the antidumping duty order and dumping margins that are at issue here. Wooden Bedroom Furniture from the People's Republic of China, 69 Fed. Reg. 67,313, 67,317 (Dep't Commerce Nov. 17, 2004)(notice of final determination of sales at less than fair value) (“Final Determination”) amended by Wooden Bedroom Furniture from the People’s Republic of China, 70 Fed. Reg. 329, 330 (Dep't Commerce Jan. 4, 2005) (notice of amended final determination of sales at less than fair market value and antidumping duty order) (“Amended Final Determination”). More specifically, Commerce determined that the PRC is an NME country and that available information did not permit the foreign market value of the merchandise to be determined as it would in a 1 (...continued) the United States market. 19 U.S.C. § 1677a. “Normal value” is the price of the foreign merchandise in its country of origin, in an appropriate third country, or the foreign product’s cost of production. See 19 U.S.C. § 1677b. Consolidated Ct. No. 05-00003 Page 5 market economy. See Preliminary Determination, 69 Fed. Reg. at 35,318. Consequently, Commerce derived the respondent’s normal value through aggregating the surrogate costs of the factors of production required to produce the product. See id. at 35,324. Because of the large number of companies under investigation, pursuant to 19 U.S.C. § 1677f-1(c)(2)(B), Commerce limited its investigation to the seven largest manufacturers of wooden bedroom furniture from the PRC.2 Among these seven was Respondent Dorbest. See Preliminary Determination, 69 Fed. Reg. at 35,318. In the investigation, Commerce chose India as the surrogate country and chiefly relied on a data set referred to as the Monthly Statistics of Foreign Trade in India (“MSFTI”) to value the factors of production (numbering over 500). Id.; Id. at 35,324; Memorandum from James H. Jochum to Jeffrey A. May, Issues and Decision Memorandum for the Less-Than-Fair-Value Investigation of Wooden Bedroom Furniture from the People’s Republic of China, at 41 (Cmt. 2), Dep’t of Commerce (November 8, 2004), P. R. Doc. 1933, available at http://ia.ita.doc.gov/frn/summary/prc/04-25507-1.pdf (“Issues & Decision Mem.”). Likewise, Commerce used nine financial statements from Indian companies to calculate profit, overhead, and general expenses. Id. at 23. For its calculation of the wage rate, 2 Other aspects of Commerce’s final determination here were challenged in Decca Hospitality Furnishings, LLC v. United States, 29 CIT ___, 391 F. Supp. 2d 1298(2005) and Guangzhou Maria Yee Furnishings, Ltd. v. United States, 29 CIT ___,___, 412 F. Supp. 2d 1301 (2005). Consolidated Ct. No. 05-00003 Page 6 Commerce ran a regression to determine the relationship between nations’ per capita Gross National Product and their wage rates; Commerce then multiplied the resulting coefficient by the PRC’s per capita gross national product to derive China’s wage rate. See Wooden Bedroom Furniture from the People’s Republic of China: Final Results of Redetermination Pursuant to Court Remand Orders (Dep’t Commerce Aug. 1, 2005) (“Remand Determination”). B. The court must sustain a final determination in an antidumping duty investigation if that determination is supported by substantial evidence on the record and is otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (2000); Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1335 (Fed. Cir. 2002). The parties here have collectively alleged more than a score of issues requiring review, some with multiple subparts. To issue a coherent opinion, the court has grouped the issues as follows: (1) Commerce’s selection of data sets, specifically, (a) Commerce’s use of Indian surrogate data to value the factors of production, (b)Commerce’s use of the MSFTI, (c) Commerce’s calculation of the wage rate, and (d) Commerce’s selection of surrogate companies for the calculation of profit, overhead, and selling, general and administrative expenses (collectively “financial ratios”); (2) Commerce’s valuation of certain specific factors of production; (3) Consolidated Ct. No. 05-00003 Page 7 other individual company-specific protests; and (4) the application (or lack thereof) of adverse inferences in Commerce’s selection of facts otherwise available. For ease of reference, the discussion is organized as follows: I. DATA SETS . . . . . . . . . . . . . . . . . . . . . . . . . 9 A. Selection of Surrogate Countries . . . . . . . . . . 15 (1) Evaluation of Indonesian Data . . . . . . . . . 19 (2) Commerce’s finding that India was a producer of the comparable merchandise . . . . . . . . . . . . 22 (4) Weighing the choice between Indonesia and India . . . . . . . . . . . . . . . . . . . . . . . 26 B. Monthly Statistics of Foreign Trade in India . 29 (1) In general . . . . . . . . . . . . . . . . . . 29 (2) MSFTI as a primary data set . . . . . . . . . 31 (3) MSFTI as applied to individual factors. . . . . 34 a) Mirrors . . . . . . . . . . . . . . . . . . 37 (i) Imported Mirrors As Inputs . . . . . 38 (ii) Glass Yug . . . . . . . . . . . . . 40 (iii)Tarun Vadehra, Highland House and Goldfindo . . . . . . . . . . . . . 44 (iv) The MSFTI data is either non-inclusive or distortive of mirror inputs . . . . 46 Consolidated Ct. No. 05-00003 Page 8 (v) Infodrive India . . . . . . . . . . . 47 (vi) Commerce’s evaluation . . . . . . . 54 (b) Paints . . . . . . . . . . . . . . . . . . 57 (c) Cardboard . . . . . . . . . . . . . . . . 62 C. Wage rate . . . . . . . . . . . . . . . . . . . 64 (1) Facial Challenge . . . . . . . . . . . . . . . 66 (2) As Applied Invalidity . . . . . . . . . . . . . 68 (a) Creation of the Regression Model . . . . . 71 (i) Notice and Comment Rulemaking . . . . 74 (ii) Deadlines . . . . . . . . . . . . . 77 (b) Distortion of Regression Model . . . . . . 77 (3) Proper Data Set . . . . . . . . . . . . . . . . 83 D. Financial Ratios . . . . . . . . . . . . . . . . 87 II. VALUING SPECIFIC FACTORS OF PRODUCTION . . . . . . . . . 105 (A) Hooks and Connectors . . . . . . . . . . . . . . . . 107 (B) Hinges . . . . . . . . . . . . . . . . . . . . . . . 110 (C) Resin . . . . . . . . . . . . . . . . . . . . . . . 111 (D) Styrofoam . . . . . . . . . . . . . . . . . . . . . 113 (E) Cardboard . . . . . . . . . . . . . . . . . . . . . 116 (F) Iron Components . . . . . . . . . . . . . . . . . . 119 III. DISCRETE COMPANY-SPECIFIC ISSUES . . . . . . . . . . . . 121 (A) Voluntary Remand Issues . . . . . . . . . . . . . . 122 Consolidated Ct. No. 05-00003 Page 9 (B) Zeroing . . . . . . . . . . . . . . . . . . . . . . 124 IV. FACTS OTHERWISE AVAILABLE/ADVERSE INFERENCES . . . . . . 128 (A) Factor Inputs . . . . . . . . . . . . . . . . . . . 134 (B) Wood Scraps . . . . . . . . . . . . . . . . . . . . 137 V. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . 139 I. DATA SETS As noted above, because pricing information in NMEs is largely unreliable, section 223 of the Tariff Act of 1930, 19 U.S.C. § 1677b(c)(1)3 authorizes Commerce to approximate the cost of production with pricing information from “surrogate” countries and companies. The court notes that the antidumping duty statute both authorizes and requires that "the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the administering authority." 19 U.S.C. § 1677b(c)(1) (emphasis added); see also Globe Metallurgical, Inc. v. United States, 28 CIT ___,___, 350 F. Supp. 2d 1148, 1156-57 (2004). 3 Hereinafter cited as 19 U.S.C. § 1677 et. seq. 2000 ed. Consolidated Ct. No. 05-00003 Page 10 The term “best available” is one of comparison, i.e., the statute requires Commerce to select, from the information before it, the best data for calculating an accurate dumping margin. The term “best” means “excelling all others.” II Oxford English Dictionary 139(2d 1989); Webster’s II New Riverside University Dictionary 168 (1988) (“[e]xceeding all others in excellence, achievement, or quality”). This “best” choice is ascertained by examining and comparing the advantages and disadvantages of using certain data as opposed to other data. See Guangdong Chemicals Imp. & Exp. Corp. v. United States, 30 CIT __, Slip Op. 06-142, at 8 (Sept. 18, 2006). In calculating factors of production, Commerce typically employs data sets. Court review of whether Commerce’s data set selection is the “best available information” addresses whether the particular selection is supported by substantial evidence and whether it is in accordance with law. Whether a data set selection issue is factual or legal, i.e., reviewed for substantial evidence or for its accordance with law, depends on the question presented. If the question is whether Commerce may use a particular piece of data, whether Commerce may use a factor in weighing the choice between two data sources, or what weight Commerce may attach to such a factor, the question is legal. Cf. Writing Instrument Mfrs. Ass’n v. U.S. Dep’t of Commerce, 21 CIT 1185, 1187-88, 984 F. Supp. 629, 634 (1997); Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994); Nation Ford Chem. Co. v. United States, 166 Consolidated Ct. No. 05-00003 Page 11 F.3d 1373, 1377 (Fed. Cir. 1999). If the question is whether Commerce should have used a particular piece of data, when viewed among alternative available data, or what weight Commerce should attach to a price or data, the question is factual. Cf. Shandong Haurong Machinery Co., v. United States, 29 CIT __,__, Slip Op 05-54 at 10 (2005); Yantai v. United States, 26 CIT 605, 607, 610-612 (2002). In reviewing legal issues presented here, the court applies the two-step inquiry of Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-843 (1984). Accordingly, Commerce has considerable discretion in selecting a data source. See Nation Ford Chem. Co. v. United States, 166 F.3d at 1377. Commerce’s exercise of its discretion, however, must still have fidelity to its statutory mandate. Statutorily, Commerce has a duty to ensure that dumping margins are calculated as accurately as possible. See, e.g., Allied-Signal Aerospace Co. v. United States, 996 F.2d 1185, 1190 (Fed. Cir. 1993); Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990). This rule applies with equal force to imports from an NME. S. Rep. No. 100-71 at 106 (1987) (Committee on Finance)(“[t]he Committee is particularly concerned that imports from certain nonmarket economy countries, such as the Peoples Republic of China, not be unfairly disadvantaged by use of the new methodology where price differences can be accounted for in whole or in part by quality differences in the imported Consolidated Ct. No. 05-00003 Page 12 merchandise.”). On factual issues, the court's role “is not to evaluate whether the information Commerce used was the best available, but rather whether a reasonable mind could conclude that Commerce chose the best available information.” Goldlink Indus. Co. v. United States, 30 CIT , , 431 F. Supp. 2d, 1323, 1327 (2006); see also CITIC Trading Co. v. United States, 27 CIT , , Slip Op. 03-23 at 16 (Mar. 4, 2003) (“while the standard of review precludes the court from determining whether Department’s [sic] choice of surrogate values was the best available on an absolute scale, the court may determine the reasonableness of Commerce’s selection of surrogate prices.”); cf. Klein v. Peterson, 866 F.2d 412, 414 (Fed. Cir. 1989) (reconciling an agency’s duty to find clear and convincing evidence of misconduct with the court’s substantial evidence standard of review as “a reasonable mind could have found the evidence of misconduct clear and convincing”). For the court to conclude that a reasonable mind would support Commerce’s selection of the best available information, Commerce needs to justify its selection of data with a reasoned explanation. Cf. Lasko Metal Prods. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994); see Olympia Indus., Inc. v. United States, 22 CIT 387, 390, 7 F. Supp. 2d 997, 1001 (1998) (“Commerce has an obligation to review all data and then determine what constitutes the best information available or, alternatively, to explain why a particular Consolidated Ct. No. 05-00003 Page 13 data set is not methodologically reliable”). In doing so, Commerce must “conduct a fair comparison of the data sets on the record” with regard to its announced method or criteria. Allied Pac. Food (Dalian) Co. v. United States, 30 CIT __, __, 435 F. Supp. 2d 1295, 1313-14 (2006). The court must also recognize that Commerce has limited resources and is under time constraints and, therefore, a certain level of imprecision is not unreasonable. See Geum Poong Corp. v. United States, 26 CIT 991, 995 (2002). In addition, choosing the best data requires expertise and, on occasion, judgment. See Lasko Metal Prods., 43 F.3d at 1446; cf. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Aut. Ins. Co., 463 U.S. 29, 52 (1983) ("It is not infrequent that the available data do not settle a regulatory issue, and the agency must then exercise its judgment in moving from the facts and probabilities on the record to a policy conclusion."). Accordingly, parties and courts may aspire to, but cannot demand, perfection. Moreover, “the court may not substitute its judgment for that of the [agency] when the choice ‘is between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo.’” Goldlink Ind. Co. v. United States, 30 CIT at __, 431 F. Supp. 2d at 1326 (quoting Am. Spring. Wire Corp. v. United States, 8 CIT 20, 22 (1984). Another related principle that may seem obvious, but is Consolidated Ct. No. 05-00003 Page 14 relevant here, is that Commerce’s findings or conclusions rendered in equations or numeric form are not beyond scrutiny. Id.; accord Geum Poong, 26 CIT at 995. Scrutiny of surrogate values is important because they are proxies -- they are not actual costs but estimates based on the best available information. If the proxy values selected prove unrepresentative, reliance on them defeats their purpose, namely, to derive a dumping margin that is as accurate as possible. See, e.g., Goldlink Indus., 30 CIT at __, Slip Op. 06-65 at 27-28. Hence, if Commerce selects a particular data set that is demonstrably unrepresentative or distortional, a reasonable mind may rightly question how such a selection could be the “best.” It may in fact be the best available information, but affirming Commerce’s choice requires a reasoned explanation from Commerce that is supported by the administrative record. In considering Commerce’s announced criteria, an additional consideration is that merely enlarging the size of an unrepresentative data set does not necessarily mean that a reasonable mind can conclude that the data set is the best available on the administrative record. Data sets need not be large (proportional to all possible data points) if the means of selecting the data points is statistically sound, e.g., statistical sampling. Similarly, a large but biased data set is of limited (if any) probative value. Cf. Bazemore v. Friday, 478 U.S. 385, 400 (1986). For example, a researcher attempting to assess the literacy rate in Consolidated Ct. No. 05-00003 Page 15 the United States who surveys every college graduate in the country would create a large data set that has absolutely no probative value; however, a researcher who randomly samples a few thousand people, chosen from the population at large, would create a valuable data set. With these considerations in mind, the court’s review of Commerce’s compilation of data sets will focus on the soundness of Commerce’s announced method or criteria in selecting data points, and its adherence thereto. Cf. Shanghai Foreign Trade Enters. Co. v. United States, 28 CIT ___, 318 F. Supp. 2d 1339, 1351-52 (2004). A. Selection of Surrogate Countries As noted above, “the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate.” 19 U.S.C. § 1677b(c)(1)(emphases added). The statute further specifies that an “appropriate” market economy country is one “(A) at a level of economic development comparable to that of the nonmarket economy country, and (B) [a] significant producer[] of comparable merchandise.” 19 U.S.C. § 1677b(c)(4). Pursuant to this statutory direction, Commerce’s regulations specify that, other than for valuing labor costs, it “normally will use publicly available information to value factors” and that it Consolidated Ct. No. 05-00003 Page 16 “normally will value all factors in a single surrogate country.” 19 C.F.R. § 351.408(c)(1)&(2)4 (emphases added). As emphasized, Commerce “normally” will use pricing data from the surrogate country selected. The use of the word “normally” means that Commerce may select other data as warranted under the circumstances. Though Commerce, as is true of all agencies, is due deference for its reasonable interpretation of its own regulations, NSK Ltd. v. Koyo Seiko Co., 190 F. 3d 1321, 1326 (Fed. Cir. 1999) (“we accord substantial deference to Commerce’s interpretations of its own regulations.”), the use of “normally” indicates that Commerce intends to give itself leeway in the selection of surrogate countries. However, Commerce cannot use this language to allow itself flexibility while simultaneously using the language to disallow consideration of data from other countries without regard for its own stated criteria. Cf. Shanghai Foreign Trade Enters. Co. v. United States, 28 CIT __, __, 318 F. 2d 1339, 1351-52 (2004)(“Commerce’s decision to use Indian Import Statistics suffers from the same flaw that Commerce alleges as a basis for rejecting plaintiff’s alternatives.”). For example, Commerce’s regulations acknowledge that “where a factor is purchased from a market economy supplier and paid for in a market economy currency, [Commerce] normally will use the price paid to the market economy supplier.” 19 C.F.R. § 351.408(c)(1). 4 All references to the Code of Federal Regulations are to the 2003 edition. Consolidated Ct. No. 05-00003 Page 17 As such, the selection of a surrogate country does not require that the particular data that is used to value a specific factor of production also come from that surrogate country; rather, it appears that Commerce’s selection of a surrogate country creates, at most, a rebuttable presumption in favor of data from that surrogate country. In selecting the surrogate country, Commerce employs a four step process. First, Commerce compiles a list of countries that are at a level of economic development comparable to the country being investigated. Department of Commerce, Import Administration Policy Bulletin 04.1: Non-Market Economy Surrogate Country Selection Process at 2 (March 1, 2004), available at http://ia.ita.doc.gov/policy/bull04-1.html. (“Policy Bulletin”). Commerce then ascertains which, if any, of those cited countries produce comparable merchandise. Id. Next, from the resulting list of countries, Commerce determines, which, if any, of the countries are significant producers of said comparable merchandise. Finally, Commerce evaluates the quality, e.g., the reliability and availability, of the data from those countries. Id. at 3. Upon review of these criteria, Commerce chooses the country most appropriate for use as a surrogate for the investigation. Here, Commerce listed five countries as economically comparable to the PRC: India, Indonesia, Sri Lanka, Pakistan and the Philippines. Memorandum from Jon Freed, Case Analyst, to File, Consolidated Ct. No. 05-00003 Page 18 through Edward C. Yang, Office Director & Robert Bolling, Program Manager, Re: Antidumping Investigation of Wooden Bedroom Furniture from the People’s Republic of China: Selection of a Surrogate Country, Dep’t of Commerce (March 8, 2004), P. R. Doc. 619. at 1 (“Surrogate Country Selection Mem.”). No party contests this finding. Id. at 5. Next, Commerce found that both India and Indonesia produced comparable merchandise. Commerce found that both countries are significant producers of comparable merchandise. Issues & Decision Mem., P.R. Doc. 1933 at 38, 40 (Cmt. 2); but see id. at 41. Last, Commerce evaluated and compared the quality of Indian and Indonesian data. Although Respondents placed domestic Indonesian pricing data on the record, Commerce rejected this data in favor of Indonesian import statistics. Focusing then on Indonesian import statistics, Commerce found that Indian import statistics were preferable to its Indonesian counterpart because: (1) Indonesian data had been unsatisfactory in other investigations; (2) Indonesian “information was either unreliable or the Indonesian import statistics were reported in units for which the Department was unable to obtain a comparable value . . .”; and (3) there existed gaps in the Indonesian data which required the use of gap- filler data that Commerce “prefers not to use unless there are clear distortions in the surrogate price import statistics . . . .” Issues & Decision Mem., P.R. Doc. 1933 at 42 (Cmt. 2). Therefore, Commerce selected India as its surrogate country for this Consolidated Ct. No. 05-00003 Page 19 investigation. Respondents challenge Commerce’s approach in several respects: (1) that Commerce erred in rejecting Indonesian data -- both its domestic and import statistics; (2) that India is not a producer of products identical to the subject merchandise; (3) that Indian production of the subject merchandise is not significant; and (4) Commerce erred in weighing the evidence, in the aggregate, that India was preferable to Indonesia. Though the weighing of the data is considered to be the fourth step of Commerce’s process of selecting a surrogate country, the court will address the issues regarding Indian and Indonesian data first, as the data issues are intertwined with all aspects of selecting a surrogate country. (1) Evaluation of Indonesian Data Commerce has indicated that it does not have sufficient data from Indonesia, that the data it does have is suspect, and that it has had data problems with Indonesia in the past. Issues & Decision Mem., P.R. Doc. 1933 at 42 (Cmt. 2). These comments seem to be directed primarily towards the use of Indonesian import data, rather than Indonesian domestic data. However, a closer examination of the record indicates that Commerce also considered the domestic Indonesian data in its evaluation. Under established case-law, “[t]he decision on which price to use -domestic or import- is based on which value will result in a Consolidated Ct. No. 05-00003 Page 20 more accurate normal value.” Rhodia, Inc. v. United States, 25 CIT 1278, 1286, 185 F. Supp. 2d 1343, 1352 (2001); Hebei Metals & Minerals Imp. & Exp. Corp. v. United States, 28 CIT __, __, Slip Op. 04-88 at 15 (July 19, 2004)(“Hebei I”). Commerce may prefer one to the other so long as a reasonable mind could find that the one preferred is more accurate than the other. See Goldlink Indus., 30 CIT at __, Slip Op. 06-65 at 27-28; cf. Yantai Oriental Juice Co. v. United States, 26 CIT 605, 617 (2002). Here, Commerce found that respondent-selected domestic Indonesian data price lists are not more reliable than import statistics because “single prices from a narrow source are not necessarily representative of an entire industry during the entire period of investigation.” Def.’s Resp. Pls.’ Surrogate Value Related Rule 56.2 Mots. J. Agency R. 26 (“Def.’s Br.”); Issues & Decision Mem., P.R. Doc. 1933 at 42 (Cmt. 2); Polyethylene Retail Carrier Bags from the People’s Republic of China, 69 Fed. Reg. 34,125 (Dep’t Commerce June 18, 2004) (notice of final determination of sales at less than fair value) and accompanying Issues and Decision Memorandum at 47 (Cmt. 9) available at http://ia.ita.doc.gov/frn/summary/prc/04-13815-1.pdf (“the experience of a single producer is less representative of the cost of an input in a surrogate country.”). In contrast, import statistics encompass a broader range of pricing data that are more representative of an entire industry during the entire period of Consolidated Ct. No. 05-00003 Page 21 investigation. Commerce was also “unable to find substantial information or directories for Indonesian furniture manufactures [sic].” Surrogate Country Selection Mem., P.R. Doc. 619 at 5. In addition to finding that Indonesian domestic data or price lists were wanting, Commerce found that Indonesian import data (1) had been unsatisfactory in other investigations; (2) that “information was either unreliable or the Indonesian import statistics were reported in units for which the Department was unable to obtain a comparable value . . .”; and (3) “because of the inadequacies of the Indonesian import statistics [Respondents] submitted gap-filler data from various sources that the Department prefers not to use unless there are clear distortions in the surrogate price import statistics . . . .” Issues & Decision Mem., P.R. Doc. 1933 at 42 (Cmt. 2). Admittedly, there is some circularity to Commerce’s explanation. Commerce rejected Indonesian domestic data due to its lack of completeness, and then rejected Indonesian import data due to the need to use “gap-filler” data which it will not use without finding distortion in import data. However, Commerce’s finding on the whole that Indonesian data is unreliable and insufficent is supported by substantial evidence. Respondents do admit that some of the Indonesian data is unreliable or unusable. Id. Though respondents do point to gap-filler data (such as “Indonesian domestic prices for woods and processed woods for the period of investigation published by the International Consolidated Ct. No. 05-00003 Page 22 Tropical Timber Organization (‘ITTO’)),” Mem. P. & A. Support Pls.’ & Pl.-Intervenors’ Rule 56.2 Mot. J. Agency R. 10 (“Pls.’ Br.”), this represents but one set of various inputs required for valuing the factors of production. Assuming without deciding, that the ITTO data is reliable, accurate, and contemporaneous, it is still reasonable for Commerce to find, on the record here, that in toto the combination of domestic and import data from Indonesia was not of a sufficient quality or amount to allow for the valuation of all the necessary factors of production, and for the calculation of financial ratios. Therefore, Commerce’s determination that the Indonesian data was unreliable is supported by substantial evidence. (2) Commerce’s finding that India was a producer of the comparable merchandise Commerce’s determination that India is a producer of comparable merchandise is also supported by substantial evidence. Commerce found evidence on the record to indicate that India produces comparable furniture. Surrogate Country Selection Mem., P.R. Doc. 619 at 5; Issues & Decision Mem., P.R. Doc. 1933 at 39 (Cmt. 2) (“Respondents do not argue that India does not produce wooden bedroom furniture.”). In particular, Commerce found that International Furniture Producers, an Indian company, as well as other companies were significant producers of wooden bedroom furniture. Surrogate Country Selection Mem., P.R. Doc. 619 at 5. Consolidated Ct. No. 05-00003 Page 23 Respondents, contend, however, that the finding that India produces comparable merchandise is irrelevant in the face of the fact that Indonesia produces identical merchandise. Pls.’ Br. 13- 14, 16. As Respondents noted in their brief, Commerce automatically considers a producer of identical merchandise to be a producer of comparable merchandise. Pls.’ Br. 13. Respondents argue that because Indonesia produces identical merchandise, and they contend India does not, Indonesia should automatically be selected as the surrogate country. Commerce, however, does not always choose the producer of identical merchandise, if there is one. Commerce explains in its Policy Bulletin that “[if] considering a producer of identical merchandise leads to data difficulties, the operations team may consider countries that produce a broader category of reasonably comparable merchandise.” Policy Bulletin at n. 6. It appears to the court that this analysis is in accordance with the legislative history of the governing statute: Because the Commerce Department may have difficulties in getting detailed data from countries not subject to investigation, the bill gives the Commerce Department authority to use “comparable merchandise” as the basis for foreign market value. Comparable merchandise is a broader category than the “such or similar” merchandise comparison which is usually used in antidumping investigations. S. Rep. No. 100-71 at 106 (1987) (Committee on Finance). Given that Commerce chooses the surrogate country and Consolidated Ct. No. 05-00003 Page 24 identifies comparable merchandise on a case-by-case basis, it is reasonable for Commerce to decline to make the producer of identical merchandise the automatic choice. The process of constructing an export price is a necessarily laborious and data-intensive process, and it is reasonable, and necessary, for Commerce to feel assured that the data it is employing is sufficient and reliable. Therefore, assuming that Indonesia is a producer of identical merchandise, that identity does not upset Commerce’s determination that India produces comparable merchandise. The statute does not require Commerce to find a producer of identical merchandise, but rather a producer of comparable merchandise. Though Commerce has indicated a preference for identical goods, that preference must sometimes take second-seat if the use of identical goods leads to data selection problems. Given Commerce’s finding that Indonesian data was unreliable, Commerce’s decision to look to comparable producers of subject merchandise was supported by substantial evidence, as was its determination that India is a producer of comparable merchandise. (3) Commerce’s finding that India was a significant producer of subject merchandise In addition to determining that a country produces comparable merchandise, the statute requires that the surrogate country be a “significant producer” of the comparable subject merchandise. Here, Commerce found that both India and Indonesia were significant Consolidated Ct. No. 05-00003 Page 25 producers of comparable merchandise. Issues & Decision Mem., P.R. Doc. 1933 at 39 (Cmt. 2) (“it would be illogical to conclude, as argued by Respondents . . . , that Indonesia is a significant producer of furniture while India is not.”). Respondents contest this finding asserting that India is not a significant producer of wooden bedroom furniture. Commerce identifies a significant producer based on a totality of the circumstances, and makes its decision concerning significance on a case-by-case basis. Policy Bulletin at 3. Commerce ascertained that “fixed standards such as ‘one of the top five producers’” are not helpful as the meaning can differ significantly from case to case.5 Id. Commerce further explained that the selection of a surrogate country is, of course, highly dependent on the available data. Here, Commerce determined that India was a significant producer of comparable merchandise. In particular, Commerce determined that there was at least one major Indian manufacturer of wooden bedroom furniture, IFP, and that there were other producers of comparable merchandise. Surrogate Country Selection Mem., P.R. Doc. 619 at 5- 5 According to the legislative history of the governing statute, “[t]he term “significant producer” includes any country that is a significant net exporter and, if appropriate, Commerce may use a significant net exporting country in valuing factors.” Conference Report to the 1988 Omnibus Trade & Competitiveness Act, H.R. Rep. No. 100-576, at 590 (1988) (“Conf. Rep.”)at 590. This, however, does not, preclude Commerce from finding that a country who is a producer of the subject merchandise but not a net exporter is a significant producer of the subject merchandise based on other criteria. Consolidated Ct. No. 05-00003 Page 26 6. Commerce has also indicated that it was able to find additional companies that produce comparable merchandise, in addition to further information and directories with regard to 416 Indian furniture manufacturers. Id. at Attachs. II & III, fr. 11, 14. Commerce found that there are upwards of 11,000 producers of furniture in India, and a furniture industry output of $1.7 billion (compared with Indonesia’s output of $1.9 billion). Issues & Decision Mem., P.R. Doc. 1933 at 39 (Cmt. 2). Commerce also indicated that it was able to find nine Indian surrogate financial statements. Id. at 67 (Cmt. 3). Consequently, Commerce’s finding that India is a significant producer of comparable merchandise is supported by substantial record evidence. (4) Weighing the choice between Indonesia and India As the discussion above indicates, Commerce’s decision to opt for India as the surrogate country in this investigation, as opposed to Indonesia (or any of the other economically comparable countries) was driven in large part by data concerns and considerations. Commerce had access to and was apprised of numerous sources of information from India. Commerce was also able to locate Indian company directories, Surrogate Country Selection Mem., P.R. Doc. 619 at 5 & Attach. III fr. 14, and Commerce had experience utilizing the Indian import statistic data base, the Monthly Statistics of Foreign Trade in India (“MSFTI”). Consolidated Ct. No. 05-00003 Page 27 Respondents point to various criteria, including the fact that Indonesia is a net exporter of wooden bedroom furniture while India is not, Pls.’ Br. 17, and the size of the industry, to indicate that Commerce should have chosen Indonesia instead of India as the surrogate country. Id. at 14-15 (claiming that the portion of India’s furniture production that is wooden furniture is 60 percent and the proportion that is bedroom furniture is 20 percent); Id. at 17 (“the values of [India’s] exports were 38 million and 30 million rupees (about $875 thousand and $690 thousand)” in 2002 and 2003 respectively). However, just as previous case law has established that Commerce need not pick the “most comparable economy”, Tehnoimportexport v. United States, 15 CIT 250, 256, 766 F. Supp. 1169, 1175 (1991)(emphasis in original), Commerce need not pick the most significant producer. Despite the fact that the Indian data may or may not be a perfect fit for every surrogate value, this court has noted time and again that the estimation of a normal value using surrogate values is an inexact science. See, e.g., Nation Ford Chem. Co. v. United States, 166 F. 3d 1373, 1377 (Fed. Cir. 1999) (“the process of constructing foreign market value for a producer in a nonmarket economy country is difficult and necessarily imprecise”) (citing Sigma Corp. v. United States, 117 F. 3d 1401, 1408 (Fed. Cir. 1997). While accuracy is a touchstone, Commerce often finds that it has to choose between two (or more) sub-optimal data sources. In such a Consolidated Ct. No. 05-00003 Page 28 scenario, where Commerce is choosing between two less-than-ideal data sources, its decision must be upheld provided it is supported by substantial evidence. Here, Commerce has demonstrated, through substantial evidence, that it was able to locate data from India that it knew to be reliable having previously worked with the data. Surrogate Country Selection Mem., P.R. Doc. 619 at 3. Therefore, based on the preceding analysis, Commerce’s determination to use India as the surrogate country for this investigation was appropriate; as a factual matter that decision was also supported by substantial evidence. The legislative history of the governing statute does indicate that “if possible,” Commerce should utilize data based on production of “the same general class or kind of merchandise using similar levels of technology and at similar levels of volume as the producers subject to investigation.” Conf. Rep. at 591. Though the desire for comparability of technology is clear, and one could argue, optimal, this desire is qualified by the phrase “if possible.” Here, Commerce reasonably determined that the quality of Indonesian data would be a hindrance in calculating surrogate values; therefore it would not be possible to utilize Indonesian data, whether or not the Indonesian furniture industry proved to be a closer match in production process to the Chinese furniture industry. Issues & Decision Mem., P.R. Doc. 1933 at 42. The statute requires Commerce to look to the comparability of Consolidated Ct. No. 05-00003 Page 29 merchandise, and Commerce acted in accordance with law in determining that comparability of merchandise does not necessarily require comparability of industry. 19 U.S.C. § 1677b(c)(4). Ultimately Commerce can, and does, mix and match the data that it chooses in its surrogate value selection, for instance through the use of gap-filling data. See Lasko Metal Prods. v. United States, 43 F. 3d 1442, 1445-46 (Fed. Cir. 1994); Nation Ford, 166 F. 3d. at 1378. Because Commerce can mix and match data when it finds data from its primary source to be wanting, the surrogate country selection amounts to a nod or a presumption as to what will be Commerce’s “go-to” country. In this investigation, the choice of India had a direct bearing on the choice of the main data set employed by Commerce in its surrogate value selection, namely in Commerce’s selection of MSFTI as its main data set in valuing the factor inputs. B. Monthly Statistics of Foreign Trade in India (1) In general The valuation of factors of production in a nonmarket economy is governed by 19 U.S.C. § 1677b(c). As noted previously, this section of the statute instructs Commerce to value factors of production “based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the [Secretary].” 19 U.S.C. § 1677b(c)(1). In addition, Commerce has promulgated regulations Consolidated Ct. No. 05-00003 Page 30 specifying that the information utilized is “normally” to be “publicly available” and that, except to value labor, the Department will normally value all factors using data from a single surrogate country. 19 C.F.R. § 351.408(c).6 While Commerce has not promulgated additional regulations to govern its selection of data for the valuation of factors of production, it has developed policy preferences relating to its data choices. Specifically, Commerce prefers data that is (1) a non-export average value; (2) most contemporaneous with the period of investigation (“POI”); (3) product-specific; and (4) tax-exclusive. Memorandum to File, From Michael Holton, Subject: Preliminary Determination Factors Valuation Memorandum: Wooden Bedroom Furniture from the People’s Republic of China, Dep’t of Commerce (June 17 2004), P.R. Doc. 1329 at 2 (“Factors Valuation Mem.”). See, e.g., Polyethylene Retail Carrier Bag Comm. v. United States, 29 CIT __, Slip Op. 05-157 at 31-32, 42-25 (Dec. 13, 2005). 6 19 C.F.R. § 351.408 (c)(1)-(2) reads: (c) Valuation of factors of production. For purposes of valuing the factors of production . . . under section 773(c)(1) of the Act the following rules will apply: (1) Information used to value factors. The Secretary normally will use publicly available information to value factors. . . . (2) Valuation in a single country. Except for labor, as provided in paragraph (d)(3) of this section, the Secretary normally will value all factors in a single surrogate country. Consolidated Ct. No. 05-00003 Page 31 (2) MSFTI as a primary data set In this investigation, the application of the factors outlined above led Commerce to rely on the Monthly Statistics of Foreign Trade in India data for the valuation of raw materials. Factors Valuation Mem. at 4. MSFTI, published by the Government of India and available through the World Trade Atlas, provides the quantity and value of all Indian imports, reported by Harmonized Tariff Schedule of India (“HTS[I]”) headings and subheadings. Commerce argues that MSFTI data represents the best available information for the valuation of raw material inputs because MFSTI data were publicly available, contemporaneous and representative of all Indian imports, ‘representative of the inputs in question,’ and tax- exclusive. Def.’s Resp. Br. Pls.’ Surrogate Value Related Mot. J. Agency Record 36 (“Def.’s Br.”); see also Issues & Decision Mem., P.R. Doc. 1933 Cmts. 10, 17, 25 & 27. Commerce also notes that it has utilized MSFTI in previous investigations. Id. at 137 (Cmt. 10) & 206 (Cmt. 25)(Commerce has a long-standing preference for MSFTI unless it is unreliable or distorted). Respondents challenge Commerce’s use of MSFTI, arguing that MSFTI data is overbroad; that better import data is available from Infodrive India and IBIS7; that MSFTI does not always capture the 7 Respondents describe Infodrive and IBIS data as using “customs data to identify inter alia, the specific type of merchandise being imported, quantity of the imports and their customs value, the origin of the merchandise and the importer.” Pls.’ Br. 25. Shing Mark contends that Infodrive India and IBIS (continued...) Consolidated Ct. No. 05-00003 Page 32 inputs that are used by the Indian wooden furniture industry; that MSFTI data is inaccurate and unreliable and that there are other sources of data that provide specific and accurate domestic data. Pls.’ Br. 32-46. As a threshold matter, Commerce has determined that when it selects import statistics as a means of valuing factors of production for a non-market economy, it would rather choose a broader range of statistics stating that “[a] broad, average price from import statistics is reliable is [sic] because the average includes a range of prices.” Def.’s Br. 52; see also Issues & Decision Mem., P.R. Doc. 1933 at 137 & 206. Commerce further elaborated that, “[a]n average price representing a subset of imports is not more accurate than an average price of all imports into India . . . .” Def.’s Br. 52; see also Issues & Decision Mem. P.R. Doc. 1933, at 206 (Cmt. 25) & 214-217 (Cmt. 26). Respondents propose Infodrive India and IBIS as alternative sources of import data, rather than MSFTI, arguing that Infodrive India and IBIS provide a detailed breakdown of Harmonized Tariff Schedule (“HTS”) subheadings. This line-by-line information, Respondents claim, would allow Commerce to make a more precise match between the input used by the Chinese manufacturers and the surrogate Indian import. 7 (...continued) report “the date of entry, the Indian HTS, the importer of record, the import description, the quantity, the value, the unit measure, foreign port, foreign country, Indian port, and method of shipment.” Issues & Decision Mem., P.R. Doc. 1933 at 131 (Cmt. 10). Consolidated Ct. No. 05-00003 Page 33 Issues & Decision Mem., P.R. Doc. 1933 at 131 (Cmt. 10); Pls.’ Br. 36. All parties agree that Infodrive India and IBIS do not provide data on all imports into India.8 The court finds that, in general, Commerce’s preference for a broader data set is reasonable and supported by substantial evidence. In essence, Commerce is arguing that where it has a choice between underinclusive data (which does not capture all the inputs used by wooden furniture manufacturers) or overinclusive data (which includes some data which is not used as an input, but captures all the inputs because of its broad range), it will choose overinclusive data. As Commerce is faced with a choice between two imperfect options, it is within Commerce’s discretion to determine which choice represents the best available information. Commerce’s decision to rely on the MSFTI data, as a general database, to value raw material factors of production, instead of Infodrive India or IBIS data, is supported by substantial evidence in that the record supports Commerce’s conclusion that the MSFTI data is more inclusive than the Respondents’ alternatives. 8 The parties do not seem to agree as to the exact percentage of imports captured by these two different databases. Commerce claims that Infodrive India only accounts for 60 percent of Indian imports, and within that percentage, not all of that is usable, so the amount is actually less. Issues & Decision Mem., P. R. Doc. 1933 at 139-40 (Cmt. 10). Respondents claim that “Infodrive India reports commercially significant quantities of roughly 73 percent of imports.” Id. Regardless of which percentage is the actual percentage, it is uncontroverted that these two databases do not capture the full universe of imports into India. Consolidated Ct. No. 05-00003 Page 34 (3) MSFTI as applied to individual factors. However, while Commerce’s choice of MSFTI data, as a general database, rather than Respondents’ alternatives, is appropriate, Commerce’s individual determinations, on a factor input by factor input basis, must also be supported by substantial evidence. If Commerce’s specific data choices do not actually include or capture the factor or input it is estimating, or a reasonably comparable item, such a choice is not supported by the record; for example, if Commerce were estimating the cost of hard-cover law casebooks by relying on the average cost of paperback legal thrillers, while another data set provides the cost of hard-cover textbooks, its choice could not be sustained. Cf. Hebei Metals & Minerals Imp. & Exp. Corp. v. United States, 29 CIT __, __ , 366 F. Supp. 2d 1264, 1272-73 (2005) (“Hebei II”) (Commerce cannot assume that the “others” category includes the coal at issue, without establishing what category of coal was used by the respondents, and without establishing that the category did “cover the type of coal used in Hebei’s production process.”); Guangdong Chems. Imp. & Exp. Corp. v. United States, 30 CIT __, __, 414 F. Supp. 2d 1300, 1311 (2006) (“Even if the court were to conclude that Commerce produced substantial evidence demonstrating that azelaic and sebacic acid are priced similarly, that would not justify Commerce’s decision to abandon a more product-specific data source.”). Additionally, if the data is heavily weighted by a Consolidated Ct. No. 05-00003 Page 35 disproportionate inclusion of higher priced or lower priced data, such that Commerce is systematically overvaluing or undervaluing the factors of production, the broad range of the statistics would not, in and of itself, render the data reliable. See Goldlink Indus., 30 CIT at , Slip Op. 06-65 at 27-28 (“Since the presumption is that NME data is distorted, Commerce must find a reasonable surrogate value. Logically then, Commerce cannot use a surrogate value if it is also distorted, otherwise defeating the purpose of using a surrogate value rather than the actual export value.”). In addition, although the court has, in specific instances, approved the use of import data, and the use of MSFTI data in particular, the court has always emphasized that in order for import data to be used, there must be reason to believe that the industry in question would use imported inputs.9 See Hebei I, 28 CIT at __, 9 Respondents also argue that the use of import data is contrary to the clear intent of the statute which requires that factors of production be valued “in” a comparable market economy country. In addition to the fact that this court, and the Federal Circuit have affirmed the use of import statistics to value factors of production (in certain circumstances), see, e.g., Nation Ford, 166 F. 3d 1373 (Fed. Cir. 1999); China First Pencil Co. v. United States, 30 CIT __, Slip Op. 06-34 (Mar. 7, 2006); Wuhan Bee Healthy Co. v. United States, 29 CIT , Slip Op. 05-142 (Nov. 2, 2005), the fact that Commerce is using import data to value the factors of production does not mean that they are not valuing those factors of production “in” the comparable market economy country. The prices that producers pay for the imported inputs are not created in a vacuum; they are created by market forces, and indicate the value that producers are willing to associate with those imported prices. Therefore, the use of import prices in and of itself is not contrary to the statute. The use of the import statistics, however, still has to be supported by substantial evidence on a case-by-case basis. Consolidated Ct. No. 05-00003 Page 36 Slip Op. 04-88 at 22 (“Commerce here did not explain why an Indian manufacturer would pay for imported coal”); Yantai Oriental Juice Co. v. United States, 26 CIT 605, 617 (2002) (“Here, Commerce has produced no evidence tending to lead to the conclusion that India's domestic AJC producers would use imported as against domestic coal.”); Wuhan Bee Healthy Co. v. United States, 29 CIT , , 374 F. Supp. 2d 1299, 1310 (2005) (Commerce gives “no reason[] as to why imported coal provides the best surrogate value.”). If it is unlikely that the domestic industry would use imported inputs, and there is domestic data available, then Commerce’s choice of import data to value factor inputs may not be reasonable. One example of when the domestic industry would choose to source its factor inputs domestically would be when the price of the imported good is markedly higher than the price of the domestic good. Hebei II, 29 CIT at __, 366 F. Supp. 2d at 1274 (“[T]he preference for domestic data is most appropriate where the circumstances indicate that a producer in a hypothetical market would be unlikely to use an imported factor in its production process. The most obvious circumstance occurs where the import price is significantly greater than the domestic price.”). Another example would be when the import statistics themselves demonstrate that the specific input is not imported into the country. While Commerce may establish criteria in order to guide its data selection process, this does not relieve Commerce of the obligation to evaluate the relative accuracy Consolidated Ct. No. 05-00003 Page 37 of domestic and import data in valuing factors of production. See Yantai, 26 CIT at 617 (“Commerce nowhere explains how the use of seemingly more expensive imported coal data is the best available information establishing the actual costs incurred by Indian AJC producers.”). Commerce itself, when noting potential price discrepancies in import data, has employed benchmarks in order to evaluate the reliability of MSFTI data. China First Pencil, 30 CIT ___, Slip Op. 06-34 (on voluntary remand, Commerce examined MSFTI data for the price of pencil cores by comparing it with price quotes from the United States, since Commerce was unable to obtain price quotes from India). (a) Mirrors The court turns to Respondents’ challenge of the use of specific MSFTI data for the valuation of mirrors, paints, and cardboard. Respondents claim that the MSFTI data is demonstrably inaccurate for valuing these specific factors of production. Pls.’ Br. 27, & 40-46. Respondents attempt to demonstrate that MSFTI is inaccurate in valuing mirrors by alleging that (1) there is evidence that Indian furniture manufacturers do not use imported mirrors in their manufacturing process; (2) in this instance MSFTI is not inclusive of the mirrors utilized; and (3) the MSFTI data utilized was overly distorted by the inclusion of specialty mirrors. Consolidated Ct. No. 05-00003 Page 38 (i) Imported Mirrors As Inputs Respondents provide a range of data to demonstrate that the import prices for mirrors selected by Commerce are considerably higher than domestic prices, suggesting either that the import prices are distorted or that Indian producers would not use imported mirrors as an input for wooden bedroom furniture. See, e.g., Hebei II, 29 CIT at __, 366 F. Supp. 2d at 1274 (companies are less likely to use imported inputs when the prices of imported inputs are higher than domestic inputs). Respondents argue that the actual price for 5mm mirrors used in wooden furniture production in India is within a range of between $9.35/m2 and $13.13/m2 instead of the Final Determination value of $60.13/m2 for mirror imports (a range of 4.6 to 6.4 times greater than the alternate prices). Pls.’ Br. 27. Repondents refer to: (a) record data from an Indian glass industry publication (“Glass Yug”); (b) actual average period of investigation prices paid for mirrors used by two Indian wooden furniture producers (Tarun Vadehra and Highland House);10 (c) and actual average prices paid for mirrors by a large Indonesian wooden bedroom furniture producer, Goldfindo. Id. Additionally, there is evidence on the record that at least one furniture producer in India only sourced mirrors domestically during the period of investigation. See Ernst & Young Private Ltd., Report 10 According to respondents, the “Highland House data were compiled and verified as complete and accurate by the independent accounting firm of Ernst & Young.” Pls.’ Br. 24. Consolidated Ct. No. 05-00003 Page 39 on the Agreed Upon Procedures on the Purchases Ledger of Highland House Private Ltd. (Apr. 1, 2004), Attach. to Letter from John D. Greenwald, Wilmer, Cutler, Pickering, Hale & Dorr, LLP., on behalf of Lacquer Craft Mfg. Inc. & Markor International Furniture (Tianjin) Manufacture Co., Ltd., to The Honorable Donald L. Evans, Secretary of Commerce, Re: Wooden Bedroom Furniture from the People’s Republic of China: Surrogate Country Submissions (Apr. 20, 2004), P. R. Doc. 770 at 56 (fr. 13) (“As per the list provided by Lacquer Craft, Ernst & Young was required to compile prices of standard 5/6mm thickness type plain mirrors purchased by Highland House during the period. During the period, Highland House purchased plain mirrors from domestic suppliers only.”). Commerce did not address the assertion that imported mirrors were not used by Indian furniture manufacturers. Instead of addressing the Respondents’ concerns with the MSFTI data, Commerce chose to attack the quality of the data proffered by Respondents, claiming that the unreliability of the data negated its ability to serve even as a means of evaluating the MSFTI data. The court finds that Commerce’s determination that the MSFTI data was accurate with respect to mirrors is not supported by substantial evidence, because Commerce did not evaluate the inaccuracies of the MSFTI data set. See Shanghai Foreign Trade Enters. Co. v. United States, 28 CIT __,__, 318 F. Supp. 2d 1339, 1352 (2004)(Commerce’s determination was not supported by Consolidated Ct. No. 05-00003 Page 40 substantial evidence when “Commerce summarily discarded the alternatives as flawed but did not evaluate the reliability of its own choice.”). Commerce argues that Yantai, Hebei II, and Shanghai Foreign Trade are inapplicable here as “Commerce did not summarily discard the alternatives as flawed without evaluating the reliability of its own choice.” Def.’s Br. 47. However, as explained below, here Commerce’s reasons for rejecting other data were either applied on an inconsistent basis, or did not actually provide a rational reason for rejecting the data. (ii) Glass Yug Commerce provided three reasons for dismissing the Glass Yug data: (1) the data do not cover the entire POI;11 (2) the Glass Yug 11 In making this comment, Commerce also emphasized that “among Indian mirror manufacturers there was intense competition that resulted in the downward prices for mirrors.” Issues & Decision Mem., P.R. Doc. 1933 at 207 (Cmt. 25). The article in which the mirror data appears provides the data that illustrates the effects of said price war. Glass Yug 9 (Apr.-June 2003), Exh. 48 to Steptoe & Johnson, LLP Submission of Surrogate Values for the Factors of Production for Shing Mark Co. Enterprise, Ltd. (Apr. 16, 2004) Attach. to Letter from Thomas L. Trendl, Steptoe & Johnson, LLP on behalf of Shing Mark Co. Enterprise, Ltd. to the Honorable Donald L. Evans, Secretary of Commerce, Re: Wooden Bedroom Furniture from the People’s Rebublic of China: Submission of Surrogate Values for the Factors of Production, (Apr. 16, 2004), P. R. Doc. 761, fr. 446 (“Shing Mark April 16 Submission”). However, as Commerce noted, intense competition is not in and of itself a reason to reject mirror prices. Issues & Decision Mem., P.R. Doc. 1933 at 207 (Cmt. 25). Indeed, one of the reasons that Commerce engages in a factor valuation process for non-market economy countries is in order to have factor input prices that are determined by the interaction of competitive (continued...) Consolidated Ct. No. 05-00003 Page 41 data are very specific and Commerce does not know whether or not Respondents use the same type of mirrors; and (3) the Glass Yug data are not specific enough because it does not contain information on the sizes of the mirrors and whether or not the mirrors are beveled. Issues & Decision Mem., P.R. Doc. 1933 at 204-206 (Cmt. 25). First, regarding the POI, Commerce may not always elevate contemporaneity, or its desire to have data covering an entire POI, over the need for accuracy. See Hebei II, 29 CIT at __, 366 F. Supp. 2d at 1275 (finding that contemporaneity is but one factor to be considered in looking at data and noting that “the Court has previously found contemporaneity to be insufficient to explain why an import price is the best available information for establishing the actual costs incurred by a producer.” (citing Yantai, Slip Op. 02-56 at 23)). If the domestic data proves to be otherwise accurate, then it may well be preferable to use accurate data, compiled over a shorter period of time, then inaccurate or unreliable data that covers the entire POI. Commerce’s second and third contentions rely on Commerce’s desire not to have underinclusive data. Essentially, Commerce is arguing that since it cannot match Glass Yug data with Respondent data, either because the Glass Yug data are not specific enough or because the data are too specific, use of the Glass Yug data would 11 (...continued) forces in a market economy context. Consolidated Ct. No. 05-00003 Page 42 lead to an underinclusive data set.12 Respondents have asserted that they have placed evidence on the record that shows the width of their mirrors. Respondents note that Shing Mark has reported its mirrors to be 3mm, 5mm, and 6mm in depth, Steptoe & Johnson, LLP, Case Brief on Behalf of Shing Mark Co., Ltd., (Oct. 6, 2004) Attach. to Letter from Jack R. Hayes, Steptoe & Johnson, LLP, on behalf of Shing Mark Co., Ltd. to the Honorable Donald L. Evans, Secretary of Commerce, Re: Antidumping Duty Investigation on Wooden Bedroom Furniture from the People’s Republic of China: Submission of Case Brief on Behalf of Shing Mark Enterprise Co., Ltd., (Oct. 7, 2004), P. R. Doc. 1854, fr. 58 (“Shing Mark Case Brief”), while there is evidence on the record indicating that Dorbest’s mirrors are 5mm in thickness, Dorbest Ltd., Second Supplemental Sections C & D Response (June 15, 2004), Attach. to Letter from Jeffrey S. Grimson, Kaye Sholer, LLP, on behalf of Dorbest Ltd., to the Honorable Donald L. Evans, Secretary 12 Commerce stated specifically, in its Issues & Decision Memorandum: the Department will consider domestic prices where sufficient record evidence demonstrates that the range of grades exist in the reported inputs and a difference of the domestic and import price appear to be caused by the breadth of category. Additionally, the Department determines that Glass Yug is not the best available information due to a lack of detail put on record by the respondents for their factor inputs of mirror and glass and the lack of specific information for the prices reported in Glass Yug. Issues & Decision Mem., P.R. Doc. 1933 at 206 (Cmt. 25). Consolidated Ct. No. 05-00003 Page 43 of Commerce, Re: Response to DOC’s June 8, 2004, Second Supplemental Sections C-D Questionnaire in Wooden Bedroom Furniture from China, (Inv. No. A-570-890), (June 15, 2004), Prop. Doc. 599, fr. 314 & 318 (“Dorbest June 15 Submission”); See Pls.’ Br. 42. Respondents maintain that this is sufficient information for Commerce to match Glass Yug data with Respondents’ inputs, because Glass Yug data provided prices for mirrors with thickness of 2.5, 3.5, 4.0, 5.0 and 6.0 millimeters.13 Pls.’ Br. 42; Shing Mark Apr. 16 Submission, P. R. Doc. 761, fr. 446. 13 If Commerce required more specific information than this in order to properly ascertain the most accurate and appropriate surrogate value, such as whether or not mirrors are cut down to a smaller size, or if they are beveled, Issues & Decision Mem. P.R. Doc. 1933 at 207 (Cmt. 25), Commerce could request such information, see Hebei II 366 F. Supp. 2d at 1273, (“During its investigation or upon remand, Commerce should have established the category of coal used by Hebei or at least established the category or categories of coal normally used to produce the subject merchandise.”). The court notes that, as Respondents point out in their brief, “[t]he thickness range of the Indian import data is, of course, completely unknown.” Pls.’ Br. 42. Commerce relies upon MSFTI data in order to ensure that it captures within its range of data the inputs actually used, and so is operating on the assumption that the broader data will somehow capture the correct factor input whereas if a narrower category is chosen, there is a chance that it will be valuing the wrong factor of production. This position, however, is only reasonable if (1) Commerce does not have evidence in the record that the narrower data set is of the same inputs as used by Respondents; and (2) the larger data set captures the factor of production in question. Respondents have asserted that the thickness of the mirrors they use is of the same thickness as the Glass Yug data. Pls.’ Br 42. Shing Mark Apr 16 Submission, P. R. Doc. 761, fr. 446; Shing Mark Case Brief, P. R. Doc. 1854 at 36 (fr. 58); Lacquer Craft May 26 Submission, P. R. Doc. 1135 at fr. 9-10; Dorbest June 15 Submission, Prop. Doc. 599, fr. 314 & 318. Respondents also assert that there is nothing on the record reflecting any consumption of mirrors outside the range. Pls.’ Br. 42. Consolidated Ct. No. 05-00003 Page 44 Additionally, it appears inconsistent for Commerce to require specificity for one data set, while allowing for a broader data set that has no indication either as to whether it includes mirrors with “beveling” or etching, as is the case with MSFTI. See Hebei II, 366 F. Supp. 2d at 1273 (“A broad and unsupported coal value falls short of a substantial evidentiary basis just as a narrow and unsupported coal value does.”); Guangdong, 318 F. Supp. 2d at 1352 (Commerce must apply its standards as consistently to its selected data set as to other data sets). At the very least, none of Commerce’s arguments with respect to Glass Yug address why this data should not be viewed as probative towards a view that Commerce’s chosen valuation is too high and/or inaccurate. (iii) Tarun Vadehra, Highland House and Goldfindo Commerce rejected the Tarun Vadehra and Highland House information because it found that the information was not “publicly available” insofar as it was not information that could “be duplicated by the Department, the Petitioners, or anyone else that lack[] access to the confidential records from which they were derived.” Issues & Decision Mem., P.R. Doc. 1933 at 162-63. (Cmt. 17). Respondents argue that this is not how Commerce has generally defined publicly available. Pls.’ Br. 34. The court does not have to reach this issue with regard to the Tarun Vadehra and Highland House data, because Commerce also explained that it found that this Consolidated Ct. No. 05-00003 Page 45 data was not representative of all Indian prices. Though Commerce considers several issues in evaluating the merits of various data, see supra, p. 30, Commerce’s determination is supported by substantial evidence in that the data from two Indian producers is not representative of the country as a whole. See Retail Carrier Bags, 29 CIT at __, Slip Op. 05-157 at 38 (finding that the selection of import statistics in valuing black inks on the basis of the import data being “country-wide” data was supported by substantial evidence, as evidence submitted to demonstrate that Indian import statistics counted as an even smaller percentage of sales of the relevant inks was not provided during the administrative review.). Commerce also implicitly rejected the data provided by Respondents from the Indonesian company, Goldfindo stating that “the Department has not considered the factor values derived form [sic] Goldfindo because Goldfindo is an Indonesian company and the Department has determined to use India as the surrogate country in this investigation.” Issues & Decision Mem., P.R. Doc. 1933 at 163 (Cmt. 17). The court notes that though Commerce is not obligated to value its factors of production from just one surrogate country, see, e.g., 19 U.S.C. § 1677b(c)(1); Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1378 n.5 (Fed. Cir. 1999) (the antidumping duty statute "does not preclude consideration of pricing or costs beyond the surrogate country if necessary"), Commerce has also noted that the same argument against Consolidated Ct. No. 05-00003 Page 46 using Tarun Vadehra and Highland House data – namely that the data do not cover country-wide prices and are too narrow to be considered for surrogate valuation – applies as well to Goldfindo data. Issues & Decision Mem., P.R. Doc. 1933 at 163 (Cmt. 17) (“the Department’s practice is to not use price quotes to value factors when other usable, reliable information is available.”). (iv) The MSFTI data is either non-inclusive or distortive of mirror inputs Respondents also argue that the Infodrive India and IBIS data indicate that the mirrors reported as being imported under subheading 7009.91.00 of the Harmonized Tariff Schedule of India (“HTS[I]”) included Taiwanese exports of rearview mirrors for automobiles to an Indian company by the name of “Enginetech” or mirrors from Germany including a “chiara” bathroom mirror and a telescopic mirror. Issues & Decision Mem., P.R. Doc. 1933 at 194 (Cmt. 25) & 183 (Cmt. 24); see also Pls.’ Br. 26. According to Respondents, these are higher-priced specialty mirrors, the inclusion of which has a distortive effect on the valuation of the mirror inputs used in furniture production. Respondents also claim that, in addition to examining the line- by-line data available from Infodrive India to ascertain what precise goods were listed under HTS[I] subheading 7009.91.00 (“mirrors, other, unframed”), they examined Taiwan’s corresponding export data for “mirrors, other, unframed” and that the Taiwanese Consolidated Ct. No. 05-00003 Page 47 export data show a low volume of exports to India under this HTS subheading. Issues & Decision Mem., P.R. Doc. 1933 at 191 (Cmt. 24). Respondents further claim that the Taiwan export data show a correspondingly larger volume of exports under the HTS subheading for rearview mirrors for automobiles. Id. Respondents theorize that the Indian government’s updating of the Tariff Classification to the eight-digit subheading level on February 1, 2003 (immediately prior to the POI) led to problems in the classification of entries. Id. at 182 (Cmt. 24). Respondent Shing Mark argues that the “reclassification of the Tariff Schedule resulted in the creation, renaming, moving, or deletion of various headings and subheadings which, in turn, resulted in the misclassification of entries in this new tariff system.” Id. Commerce does not directly address this allegation, nor the apparent discrepancy between Taiwanese export data and Indian import data. Commerce rather points to the existence of an HTS[I] subheading for rearview mirrors which, Commerce argues, would negate the possibility of rearview mirrors being classified under subheading 7009.91.00. Id. at 205 (Cmt. 25). This does not address the issue of potential misclassification – if rearview mirrors are miclassified under “mirrors, other, unframed” the existence of a subheading for rearview mirrors proves nothing. (v) Infodrive India Consolidated Ct. No. 05-00003 Page 48 Rather than directly addressing Respondents arguments, Commerce rejected any attempt to use Infodrive India data to show that the MSFTI data was inaccurate on three bases: (1) Commerce could not use the more specific data provided in Infodrive India because Respondents’ description of their inputs was not specific enough to allow Commerce to make an exact match between Infodrive India and the Respondents’ inputs; (2) the data in Infodrive consisted of “non-quantifiable unit measurement[s]”; and (3) Commerce found Infodrive India’s data to be unreliable. Issues & Decision Mem., P.R. Doc. 1933 at 139 (Cmt. 10)& 203 (Cmt. 25). The court will address each point in turn.14 With respect to the first point, Commerce found that the input descriptions provided by Respondents did “not provide sufficient descriptions or distinguishable characteristics that would allow the Department to search the voluminous Infodrive India data and IBIS data to obtain accurate surrogate-value information.” Issues & Decision Mem., P.R. Doc. 1933 at 138 (Cmt. 10). Regardless of whether such a search is possible, this point does not render the Infodrive India or IBIS data ineffective as a 14 Commerce also points to the “lack of contemporaneous data for the entire POI” as another reason for rejecting such data. Issues & Decision Mem., P.R. Doc. 1933 at 204 (Cmt. 25). Again, this argument does not address why this data cannot be used as a reference point to evaluate other data. Also, as noted in the courts previous discussion, contemporaneity, in and of itself should not be viewed as the sole reason to discard data; rather the quality of the data needs to be viewed in its totality. See supra p. 41. Consolidated Ct. No. 05-00003 Page 49 benchmark or other means of testing the MSFTI data. If Infodrive India does, as contended by the Respondents, provide a line-by-line item breakdown of imported inputs into India, then a claim that there is no way to match inputs with the Infodrive India data is not responsive to whether or not Infodrive India casts light on potential inaccuracies in the MSFTI data set. Turning to the second aspect of Commerce’s analysis, Commerce concluded that Infodrive India information is not usable because the unit measurements vary and are non-quantifiable. Respondents note, however, that “[i]f anything, the fact that the units of measure differ greatly [in Infodrive India] supports Dorbest’s argument that the import statistics incorporate a hodgepodge of product (much of which was misclassified) and therefore is not suitable for use as a surrogate value.” Reply Br. Pls. Dorbest Ltd., Rui Feng Woodwork (Dongguan) Co., & Rui Feng Lumber Supp. Rule 56.2 Mot. J. Agency R. Relating to Issues Surrogate Country, Surrogate Values & Financial Ratios (“Dorbest Reply Br.”) 6, fn.9. The court finds merit in Respondents’ argument. Given that Respondents offered the Infodrive India data to demonstrate alleged inaccuracies and misclassifications in the MSFTI data for India, Commerce’s reason for rejecting the data set only buttresses Respondents’ argument, and does not provide a reason for not using Infodrive India to ascertain if there are problems with MSFTI’s data set with respect to mirrors. Consolidated Ct. No. 05-00003 Page 50 Finally, Commerce determined that it was Infodrive India data, and not MSFTI data, that was unreliable. In its Issues and Decision Memorandum that accompanied Commerce’s final determination, Commerce stated: The only information on the record that India’s HTS reclassification resulted in any misclassifications under the Indian Tariff Schedule is from the Infordrive [sic] India data. In fact, we found that the MSFTI information from the World Trade Atlas does not contain the same misclassification as those contained in Infodrive India. Therefore, we find that, if India’s reclassification of the Tariff Schedule resulted in any misclassifications of import items, it is Infodrive India’s data that is unreliable because these data are the only data that report such misclassification. The Department observes further that the World Trade Atlas reports the official MSFTI data which may account for Infodrive India’s misclassifications. Issues & Decision Mem., P.R. Doc. 1933 at 138-39 (Cmt. 10). It appears to the court that, in essence, Commerce is making two points: (1) the MSFTI data is correct because it is corroborated in the World Trade Atlas even though the World Trade Atlas simply compiles the MSFTI data reported to it by the Indian government; (2) because MSFTI and the World Trade Atlas report the official data, they are presumed to be accurate and if only one source contradicts this data, it is the contradictory source that must be unreliable and inaccurate. Respondents argued before Commerce that Commerce had utilized Infodrive India data in a previous investigation: Certain Color Consolidated Ct. No. 05-00003 Page 51 Television Receivers From the People's Republic of China, 69 Fed. Reg. 20,594 (Dep't Commerce April 16, 2004) (notice of final determination of sales at less than fair value and negative final determination of critical circumstances).15 Dorbest Reply Br. 5. Commerce, in using the Infodrive data in Color Televisions determined that: the data on which Infodriveindia [sic] is based is not private at all, but rather is Indian customs data. Because we initially shared TCL’s concerns about the source of this data, early on in this investigation, we contacted Infodrive India Pvt. Ltd. (Infodrive), the company responsible for maintaining the Infodriveindia [sic] website, and inquired about its data collection methods. According to Infodrive officials, Infodrive: 1) obtains the information in question from official Indian customs data; 2) receives daily customs data transmitted each month from the Indian customs department; and 3) presents the Indian customs data exactly as it is received, without additions or deletions. Memorandum from Laurie Parkhill to Jeffrey A. May, Issues and Decision Memorandum for the Antidumping Duty Investigation of Certain Color Television Receivers from the People’s Republic of China, at 43 (Cmt. 9)(April 16, 2004) available at http://ia.ita.doc.gov/frn/summary/prc/04-8694-1.pdf.16 Therefore, 15 This decision was recently affirmed in Sichaun Changdong Electric Co. v. United States, 30 CIT __, Slip Op. 06-141 (Sept. 14, 2006)(upholding Commerce’s use of Infodrive data rather than MSFTI data where Infodrive was product specific and contemporaneous). 16 See also Memorandum from Alice Gibbons, Analyst Office of AD/CVD Enforcement to File, Re: Placing Information on the Record Regarding Infodriveindia.com in the Antidumping Duty Investigation on Color Television Receivers from the People’s (continued...) Consolidated Ct. No. 05-00003 Page 52 according to Commerce’s own explanation, Infodrive India presents Indian government import data that it receives on a monthly basis from the Indian customs department. Moreover, Infodrive India data appears to be the same data provided by MSFTI (through the World Trade Atlas) in a disaggregated form, providing descriptions of the items that are imported and classified under a particular HTS[I] subheading. The view that this is a subset of the same data set, but more detailed, is supported by the assertion by Respondents that “the total Rupee value of imports from Taiwan from Infodrive is 2,665,062.75, while the total imports in the MSFTI from Taiwan is 0.002665 Billion, or 2.665,000 (World Trade Atlas data rounds figures).” Dorbest Reply Br. 6. Therefore, if Infodrive India data provides a breakdown of the import data reported in MSFTI, it is unreasonable for Commerce to conclude that Infodrive data is unreliable or contains misclassifications, while simultaneously claiming that MSFTI is both reliable and contains no inaccuracies. In addition, because the record suggests that the disaggregated line-item data indicates that items manufactured by “Enginetech” are potentially rearview 16 (...continued) Republic of China (PRC) 2 (Nov. 17, 2004), Attach. to Letter from Eric C. Emerson, Thomas J. Trendl, & Jack R. Hayes, Steptoe & Johnson LLP, to the Honorable Donald L. Evans, Secretary of Commerce, Re: Wooden Bedroom Furniture from the People’s Republic of China: Additional Comments on “Valuation of the Factors of Production”, P.R. Doc. 907 at fr. 125-129 (May 14, 2004). Consolidated Ct. No. 05-00003 Page 53 mirrors17 there is a sufficient reason to further investigate whether or not rearview mirrors (and other speciality mirrors) are included in the basket category selected by Commerce to value mirrors. Regardless of whether or not Commerce finds it appropriate to use the Infodrive India data to value mirrors, the Infodrive India data can prove to be illuminating as to the nature of the product actually being valued within a specific (and in this case 17 Petitioners claim that the information listed in Infodrive India indicates that the mirrors shipped by Enginetech are “mirror plates” and do not indicate that these were actually rearview mirrors. Issues & Decision Mem., P.R. Doc. 1933 at 202 (Cmt. 25). Respondents have placed data on the record, however, that, if correct, demonstrate that Enginetech is an autoparts company that sells rearview mirrors for automobiles. See Dorbest Reply Br. 7; Exh. 9 to Letter from John D. Greenwald, Wilmer, Cutler, Pickering, Hale & Dorr, on behalf of, Lacquer Craft Manufacturing Co., Ltd. & Markor International Furniture (Tianjin) Manufacture Co., to the Honorable Donald L. Evans, Secretary of Commerce, Re: Wooden Bedroom Furniture from China: Surrogate Value Submission, P.R. Doc. 1695, fr. 123 (Aug. 17, 2004) (“Lacquer Craft Aug. 17 Submission”) (referencing www.enginetech-autoparts.com). Respondents also claim that the Taiwanese imports from Enginetech were described as “6 inch mirror with housing”, “MB100 Mirror plates with lettering,” “TWM mirror plate with lettering.” Dorbest Reply Br. 6; Steptoe & Johnson, LLP, Submission of Factual Information for Valuing Factors of Production of Shing Mark Enterprise Co., Ltd., (Aug. 17, 2004) Attach. to Letter from Eric C. Emerson, Steptoe & Johnson, LLP on behalf of Shing Mark Enterprise Co., Ltd., to the Honorable Donald L. Evans, Secretary of Commerce Re: Antidumping Duty Investigation on Wooden Bedroom Furniture from the People’s Republic of China: Submission of Factual Information for Valuing Factors of Production, Pub. 1694 fr. 161-162 (Aug. 17, 2004)(“Shing Mark Aug. 17 Submission”); Lacquer Craft Aug. 17 Submission, Pub. 1695 at fr. 95. The information placed on the record indicates at least a colorable claim that the surrogate value selected by Commerce includes data from rearview or other specialty mirrors. Consolidated Ct. No. 05-00003 Page 54 basket)18 HTS[I] subheading. (vi) Commerce’s evaluation Having concluded that Infodrive India data was unreliable, Commerce examined the MSFTI data in order to ascertain whether or not there was any distortive effect as a result of imports from Taiwan and Germany. Commerce employed the MSFTI data for mirrors from Indonesia as a benchmark19, and calculated the POI average prices for Indonesia and found that the POI average price from both Taiwan and Germany were lower than that of Indonesia. Issues & Decision Mem., P.R. Doc. 1933 at 204 (Cmt. 25). Commerce concluded that this examination of the data demonstrated that “to the extent that any imports were misclassified from Taiwan there is no record evidence that these were distortive as the value comparison described above clearly indicates.” Id. at 205 (Cmt. 25). While this attempt at benchmarking may indicate that the Taiwanese and German data were at least as representative of the 18 Commerce has previously noted the broad aspect of an HTS[I] subheading. Freshwater Crawfish Tailmeat from the People’s Republic of China, 64 Fed. Reg. 27,961, 27,962 (Dep't Commerce, May 24, 1999) (final results of new shipper review) ("[I]mport data from basket categories can be too broad to be reliable."). 19 Commerce used the Indonesian data to analyze this issue despite the fact that Commerce considers Indonesia to be a country with subsidies and therefore excluded those products originating from Indonesia from its surrogate value calculation in the Final Determination. Issues & Decision Mem., P.R. Doc. 1933 at 204 (Cmt. 25). Consolidated Ct. No. 05-00003 Page 55 goods classified in 7009.91.00 as the Indonesian imports, it does not address the claim that the Taiwanese and German mirrors include specialty mirrors, and that specialty mirrors lead to a higher valuation of the mirrors that are used in making wooden furniture sets. If the distortion alleged by the Respondents is limited to a problem with the data for imports from Taiwan and Germany, then this evaluation by Commerce would demonstrate that the problems with the Taiwanese and German data were not distortive. However, if the problem with the mirror data is endemic to the subheading chosen by Commerce to value the mirrors, then the distortions could also exist within the Indonesian data, and the evaluation does not demonstrate that the Taiwanese and German data do not have distortions. Additionally, testing import data against import data does not answer the broader issue raised by Respondents, i.e., that the import data suggests higher prices for imported mirrors than domestic mirrors, which would suggest that furniture manufacturers would not purchase imported mirrors as inputs. From this examination of the record and analysis it appears that Commerce never examined or explained evidence on the record that would seem to indicate (1) that the Indian furniture industry does not use imported mirrors as an input; or (2) if the Indian furniture industry does use imported mirrors as an input, that the data Commerce is employing actually does not capture the price of plain mirrors utilized in furniture production in India (i.e., Consolidated Ct. No. 05-00003 Page 56 Commerce only reviewed whether the data is indeed overinclusive of plain mirrors, rather than whether the data was not inclusive at all or distorted). See, e.g., Issues & Decision Mem., P.R. Doc. at 198 (Cmt. 25) (“Respondents [contend] that the core problem is that the Indian import statistics are shaped by imports of products not used in furniture production.”). Commerce must reexamine the MSFTI data, in comparison to other data on the record, and/or determine that the data does not include specialty mirrors. In sum, on this issue, Respondents have placed on the record data from four different sources indicating prices that are significantly lower than the import-data-based values selected by Commerce, yet Commerce has not evaluated the MSFTI mirror data vis- a-vis the benchmarks offered by the Respondents, or vis-a-vis any other non-MSFTI source.20 Commerce has rendered it impossible to 20 Commerce does try to explain, post-hoc, the differences between the import prices and the prices provided by Respondents: . . . all of the values to which [sic] respondent claims are “mutually reinforcing” were championed by respondent companies that had a keen interest in selecting low values. It is hardly shocking that the values they propose as “more accurate” are at the lower end of the spectrum. Conversely, Indian import values are more representative of prices from all of India because they are not derived from the few values hand picked by respondents. Therefore, it is perfectly logical that they are higher; however, higher values do not equate to inaccurate values, as respondents erroneously assert.” Def.’s Br. 64. This explanation, however, merely relies on the blanket statement that import prices are more representative of prices from all of India. As explained above, this rationale (continued...) Consolidated Ct. No. 05-00003 Page 57 demonstrate any inaccuracies or distortions in the data it has selected, by requiring data sets being offered for comparisons to be faultless. This is a standard that even Commerce’s data set cannot meet. Respondents have also placed on the record a colorable claim that the data set includes data that is either not representative of the factor input or has a highly distortive effect on the factor valuation. Because Commerce has not analyzed these factors, or Respondents’ claims, the court cannot conclude that Commerce’s conclusions with regard to mirrors are supported by the record. (b) Paints Respondents allege that using MSFTI to provide a surrogate value for paints is not in accordance with law or supported by substantial evidence, because it leads to an inaccurate valuation of paint inputs. Respondents allege that they have placed evidence on the record that indicates that the surrogate value chosen by Commerce is higher than the price paid by wooden bedroom furniture manufacturers, and that the HTS[I] heading chosen to value paint is overly broad, insofar as it also captures paint allegedly used for automobiles and shipbuilding. Pls.’ Br. 26 - 27. Respondents submitted information from (1) a major Indian paints supplier, Asia 20 (...continued) only holds true if the import prices used capture the actual inputs in question. Accordingly, Commerce’s rationale does not constitute a reasonable examination or explanation as to what may be driving the difference in prices. Consolidated Ct. No. 05-00003 Page 58 Paints; (2) Infodrive and IBIS; and (3) Highland House and Tarun Vadhera, that they claim provides better and more accurate information for valuing the paint factor input, in addition to demonstrating that the value selected by Commerce is inaccurate. Id. 26 - 27, 32 - 34; Commerce rejected all surrogate values proffered by Respondents, and chose to value paint under a four digit heading for paint, HTS 3208. Issues & Decision Mem., P.R. Doc. 1933 at 214 (Cmt. 26). Respondents specifically allege that the surrogate value chosen by Commerce for paint is overvalued, pointing to information they have placed on the record that their price range for paint extends from $2.18 to $4.03 a kilogram, while the surrogate value selected by Commerce was $4.48/kg.21 They suggest that the very fact that the values they have culled from various data sources are lower than Commerce’s chosen values is in and of itself sufficient reason for Commerce’s valuation to be doubted. However, it appears to the court that this is not the test suggested by Hebei I, 28 CIT __, Slip Op. 04-88 and Hebei II, 29 CIT __, 366 F. Supp. 2d 1264. 21 Respondents have divided their paints usage into five categories: thinner, lacquer, sealer, stain and glaze. For thinner, respondents provided values of between $1.18/kg - $1.36/kg with a final determination valuation of $2.83/kg. The final determination valuation for laquer, sealer, stain and glaze was $4.48/kg each. For laquer, the respondents provided values of between $2.11/kg - $3.89/kg; for sealer $2.42/kg - $3.89/ kg; for stain $2.18/kg - $3.89/kg; and for glaze $2.99/kg - $4.03/kg. Pls.’ Br. 27. Respondents also provided a per liter price for the paint, but the court could not ascertain from the record before it the conversion factor for liters to kilograms for the various types of paint. Consolidated Ct. No. 05-00003 Page 59 Hebei I & II stand for the proposition that import prices should not be used when an industry uses domestic inputs, and that one means of ascertaining whether or not domestic inputs are used is by comparing domestic to imported prices. Hebei II 366 F. Supp. 2d at 1274. However, in the case at bar, in the table comparing various paint values provided by Respondents, Respondents provide information from Infodrive India from two companies, “Advance Paints and Linea Coats PVT, that were exhibitors at ‘Indiawood 2004' and, unlike the other importers, import the types of paint . . . that are used to finish wooden bedroom furniture.” Pls.’ Br. 26. Respondents have also, therefore, indicated that the value that Commerce selected includes the types of paint used in wooden furniture production. Id. The court’s analysis for mirrors found that the selection of MSFTI as a data source for the valuation of mirrors was not supported by substantial evidence in the face of evidence that (1) companies do not source their mirrors internationally; (2) the MSFTI data selected was either not inclusive of the type of mirror used in wooden furniture production or was distorted by the inclusion of specialty mirrors when the factor input was plain mirrors. For paint, there is evidence on the record that the right type of paint is imported. Additionally, though Respondents have placed evidence on the record that the major paint importers as listed in Infodrive India are companies that “purchase or supply paints used by the Consolidated Ct. No. 05-00003 Page 60 automobile, computer, chemical and shipbuilding industries” and that “none of these importers have anything to do with furniture production,” Pls.’ Br. 26, they have not alleged or demonstrated that these paints are distortive of the final surrogate value. Therefore, Respondents have not alleged a sufficiently colorable claim that the surrogate value chosen by Commerce is either not inclusive of the factor input, or that it is overly distortive of the value of the factor input. Thus, Respondents’ argument becomes an allegation that Commerce’s choice for surrogate value is overinclusive and that instead Commerce should use, inter alia, Asian Paints (India) Dealers Price List. Issues & Decision Mem., P.R. Doc. 1933 at 217- 223 (Cmt. 27). Respondents assert that this list is publicly available, tax-exclusive and contemporaneous with the POI. Additionally, Respondents contend that this list “describes the maximum retail prices to be charged by all Indian dealers, is representative of a large sample of domestic prices because Asian Paints is a major producer of paint products that are sold and distributed throughout India, [and] is not aberrational. . . .” Id. at 218. Respondents contend that for at least Shing Mark, the Asian Paints price list includes products that are comparable to the reported factors of production, such as Asian Paints “Melamyne Sealer” and “Melamyne Glossy.” Id. Commerce rejected the use of the Asian Paints price list, Consolidated Ct. No. 05-00003 Page 61 stating that it does not “best represent the respondents’ paint inputs.” Id. at 222. Given that Shing Mark listed over 100 different paint inputs and Lacquer Craft listed over 230 paint inputs, Commerce found that a single product list from a single producer would not represent the “broad” multitude of factors employed by the various respondents. Id. Commerce also determined that “a single price list from a domestic Indian producer is not a representative sample of the domestic prices charged for the respondents’ finishing factors.” Id. at 223. Finally, after examining the differences in retail prices reported on the Asian Paints website, Commerce found that the Asian Paints price list was not indicative of the prices paid by end-users, but rather was a list of prices paid by dealers, and was therefore not indicative of the prices paid by furniture manufacturers. Id. Effectively, Commerce found that the prices from the Asian Paints price list were both underinclusive, and at the wrong level of trade to use for surrogate valuation. As stated in our analysis above, supra at 32-33, when Commerce is faced with a choice between two sub-optimal data sources, i.e., underinclusive vs. overinclusive data, Commerce’s choice between the two is reasonable and supported by substantial evidence. Chia Far Indus. Factory Co. v. United States, 28 CIT __, __, 343 F. Supp. 2d 1344, 1352 (2004) Because Commerce’s choice of MSFTI data to value Consolidated Ct. No. 05-00003 Page 62 paint inputs22 in light of its alternatives was a reasonable determination of the best available data, Commerce’s selection of MSFTI data is appropriate.23,24 See Goldlink, 30 CIT at __, Slip Op. 06-65 at 8. (“The Court’s role in the case at bar is not to evaluate whether the information Commerce used was the best available, but rather whether a reasonable mind could conclude that Commerce chose the best available information.”)(citation omitted). (c) Cardboard 22 The court’s holding here is limited to finding that Commerce may reasonably determine that MSFTI represents the best available information for valuing paint. This holding, however, is not preclusive of Commerce finding a more narrow subheading (to the six or eight digit level) or a series of subheadings, to value paints, instead of the broad 4 digit heading of HTS[I] chosen in the final determination. 23 AFMC avers that Commerce’s selection of a separate HTS[I] subheading for thinner was unsupported by substantial evidence and not in accordance with law, alleging that the aggregation of products into “thinner” when the thinner was not an independent factor of production, but rather was added to other finishes, was not appropriate. The court finds this argument to be without merit. Commerce was able to find a more specific match for the product reported to be “thinner,” and therefore it was reasonable for Commerce to use that valuation for that input. Cf. Guangdong Chems.,30 CIT at __,414 F. Supp. 2d at 1311. Therefore, Commerce’s selection of a separate valuation for “thinner” is appropriate. 24 It is not clear whether or not Respondents are also advocating for the valuation of paint using either Infodrive India or Tarun Vadehra and Highland House data. To the extent Respondents are, the court finds that its analysis above, with respect to overinclusive or underinclusive data and the select nature of Infodrive India, Tarun Vadehra and Highland House data, see supra at 32-33,44-46, applies equally here. Consolidated Ct. No. 05-00003 Page 63 Respondents also challenge Commerce’s valuation of packing cardboard, which it assigned a value of $1.10/kg based on HTS[I] subheading 4808.9000 (“[p]aper and paperboard, corrugated (with or without glued flat surface sheets), creped, crinkled, embossed or perforated, in rolls or sheets, other than paper of the kind described in heading 4803 - other.”). Pls.’ Br. 27. Respondents assert that this valuation is too high, basing their assertion on data gathered from Tarun Vadehra and Highland House in India and Goldfindo in Indonesia. According to Respondents, the cardboard prices paid by these wooden furniture manufactures ranged from $0.31/kg to $0.65/kg. Id. Respondents object to the utilization of MSFTI data in this instance because these values are not specific to the type of cardboard used by the Respondents. Respondents suggest that Highland House and Tarun Vadehra provide a better, more specific valuation for packing materials, as the packing materials employed by these furniture producers are known in detail, as opposed to the broad, general MSFTI data. Id. at 29. Once again, Commerce was faced with a choice between two imprecise, not-perfect surrogate values. The MSFTI data runs the risk of being overbroad, in capturing more factor inputs than are actually utilized by the wooden furniture industry in India, while the data from the two Indian furniture producers runs the risk of being too narrow, such that the factor input in question is not actually captured by the proffered values. Though Respondents have Consolidated Ct. No. 05-00003 Page 64 asserted that the cardboard data is distortive, they have not produced evidence to indicate in what way the data is distortive. Issues & Decision Mem., P.R. Doc. 1933 at 225 (Cmt. 29). Respondents have not alleged that the industry does not use the inputs captured by MSFTI, nor that the valuation is distorted by the inclusion of more expensive specialized products. Respondents’ assertion in this instance is limited to pointing out how certain producers in India pay less for their cardboard inputs. Pls.’ Br. 27 & 36. Though one could conclude from this evidence that this lower price is reflective of the real experiences of all Indian producers, one could also conclude that these are specific prices for specific producers, reflective of their unique product needs, and thus not reflective of the experience of all Indian producers. Commerce examined and evaluated the data sources before it, and chose between two imperfect data sources. Commerce’s conclusion, that MSFTI represented the best available information in this instance, was reasonable and supported by substantial evidence. C. Wage rate One of the primary factors of production for any product is the cost of labor. Commerce treats the wage rate differently from all other factors of production; for labor, Commerce employs “regression-based wage rates reflective of the observed relationship between wages and national income in market economy countries,” 19 C.F.R. § 351.408(c)(3). Using this regression analysis, Commerce Consolidated Ct. No. 05-00003 Page 65 determines the relationship between countries’ per capita Gross National Product (“GNI”) and their wage rates; Commerce approximates the wage rate of the PRC by using the PRC’s GNI as the variable in the equation that was the result of the regression. See Wooden Bedroom Furniture from the People’s Republic of China: Final Results of Redetermination Pursuant to Court Remand Orders (Dep’t Commerce Aug. 1, 2005) (“Remand Determination”).25 Stated mathematically: where Y is a constant26 (as determined by the regression model), X is the coefficient (as determined by the regression model), GNIPRC is the per capita GNP of the PRC, and WagePRC is the derived wage rate for the PRC. Id. at 9. For wage rate data used to calculate the regression, because of “the practices of the respective data sources,” “[t]here is normally a two-year interval between the current year and the most recent reporting year of the data required for [Commerce’s] 25 Following the commencement of this litigation, Commerce requested, and was granted, a voluntary remand to correct some flaws in its wage rate calculation. The determination under review is Commerce’s results pursuant to this voluntary remand. This is the only aspect of Commerce’s determination that the court is considering after a remand. 26 This term is also known as the y-intercept. The regression model attempts to fit a line through various data points, plotted along the x and y axes (here the x axis representing GNI and the y axis representing the wage rate). The constant, or y-intercept, is the point at which the line predicted by the regression equation crosses the y-axis. See, e.g., Lawrence Hamilton, Data Analysis for Social Scientists 309 (Wadsworth Publishing Co. 1996). Consolidated Ct. No. 05-00003 Page 66 methodology.” Remand Determination at 4. Therefore, Commerce uses the “most recent reporting year” provided by each country and inflates those values, i.e., multiplies the values by the rate of inflation. Commerce calculates the wage rate regression once a year and uses that regression to calculate the wage rate for all investigations and administrative reviews in NMEs conducted during that year. For this investigation, Commerce calculated its regression after choosing a wage rate data set for fifty-four market economy countries, including the United States, as reported to the World Bank for 2001. See Remand Determination at 4-5 & 14. Respondents and AFMC challenge numerous aspects of Commerce’s calculation of the wage rate here. Broadly speaking, Respondents and AFMC allege three types of errors: (1) that Commerce’s method for calculating the wage rate is facially unlawful; (2) that even if the regulation is not facially unlawful, the manner in which Commerce implements its regulation is unlawful; and (3) that Commerce erred in its choice of data.27 (1) Facial Challenge 27 As Commerce noted in its Final Determination, and in its brief, Commerce is currently seeking comments on its calculation methodology for its NME Wage Rate Methodology. Expected Non- Market Economy Wages: Request for Comment on Calculation Methodology, 70 Fed. Reg. 37,761 (Dep’t. Commerce June 30, 2005). While the court’s holding infra is that Commerce is not required, by the statute, to limit its data set in its regression analysis to economically comparable countries, in the manner calculated by Respondents, nothing stated by the court here would preclude Commerce from considering Respondents’ arguments in Commerce’s reexamination of its NME wage rate methodology. Consolidated Ct. No. 05-00003 Page 67 As noted above, the antidumping statute requires that Commerce’s “valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the administering authority.” 19 U.S.C. §1677b(c)(1) (emphases added). In defining the market economy countries to which Commerce may turn, Congress further requires that Commerce [S]hall utilize, to the extent possible, the prices or costs of factors of production in one or more market economy countries that are – (A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise. 19 U.S.C. § 1677b(c)(4) (emphasis added). Commerce’s regulation provides that “[f]or labor, [Commerce] will use regression-based wage rates reflective of the observed relationship between wages and national income in market economy countries.” 19 C.F.R. § 351.408(c)(3). Respondents argue that although the section 1677b(c)(4) permits Commerce to use data from only “comparable” market economies, Commerce’s regulation does not require such comparability in the selection of economies for the calculation of the wage rate. Respondents further state that Commerce intended to include the word “comparable” in its regulation, and unintentionally omitted that Consolidated Ct. No. 05-00003 Page 68 word from its final rule. Therefore, Respondents argue, Commerce’s regulation is void on its face. The court disagrees. Although Commerce’s regulation does not specifically provide that Commerce must choose comparable market economies, it does not suggest the opposite either. Rather, the regulation is silent as to how Commerce will select market economies for its data set. As such, even if Respondents were correct that the antidumping statute permits use of data only from comparable market economies, Commerce could conceivably be faithful to both its regulation and Respondents’ interpretation of the antidumping statute by using data from only comparable market economies. Accordingly, Respondents fail to state a case for the facial invalidity of Commerce’s regulation. Cf. Reno v. Flores, 507 U.S. 292, 301 (1993); INS v. Nat’l Center for Immigrants' Rights, Inc., 502 U.S. 183, 188 & 194 (1991). (2) As Applied Invalidity Respondents next argue that Commerce’s selection of market economies for its regression in this instance violates the antidumping statute. Specifically, Respondents argue that most of the countries in the data set have a level of economic development far exceeding that of the PRC. For example, among the nations included within the data set is the United States (a nation with one of the highest GNI’s). See Import Administration, Expected Wages Consolidated Ct. No. 05-00003 Page 69 of Selected Non-Market Economy Countries, Expected Wage Calculation: 2003 GNI Data, Regression Analysis: 2003 GNI Data, Revised November 2005, htt p : / / i a . i t a .doc.gov/wages/03wages/110805- 2003- Tables/03wages-110805.html (last visited August 10, 2006). Therefore, Respondents contend, Commerce’s regression methodology employs inappropriate countries for its calculation of the PRC’s wage rate. While it is true that Commerce’s regression analysis uses data from non-comparable countries, the result (in theory) derives what should be a comparable wage rate for the PRC. As Commerce has explained “[t]he regression that results provides a formula that, when applied to the non market economy country’s GNI, enables Commerce to determine in an accurate, fair and predictable manner, the labor wage rate of a market economy country at a comparable level of development.” Def.’s Resp. Parties’ Comments Remand Results Re: Commerce’s Labor Wage Rate 24 (“Def.’s Resp. Parties Cmts.”). It may be the case that there is a relationship between a country’s GNI and its wage rate and that accuracy would be greatly enhanced by using a broader data set of nations than just those at a comparable level of development to the PRC. Under such circumstances, using a broader data set may constitute the “best available information” and recourse to a broader range of market economy countries could be "appropriate" in advancing one of the Consolidated Ct. No. 05-00003 Page 70 antidumping statute’s purposes, i.e., to calculate the dumping margin as accurately as possible. This view of the “best available information” and “appropriate” market economy country or countries requirements is reflected in numerous court decisions. See, e.g., Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United States, 268 F.3d 1376, 1381 (Fed. Cir. 2001) (“we have specifically held that Commerce may depart from surrogate values when there are other methods of determining the ‘best available information’ regarding the values of the factors of production.”)(citations omitted); Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1378 n.5 (Fed. Cir. 1999) (the antidumping duty statute "does not preclude consideration of pricing or costs beyond the surrogate country if necessary"); Lasko Metal Prods. Inc. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994)(relying on the international market price for the factors of production); Globe Metallurgical, Inc. v. United States, 28 CIT ___,___, 350 F. Supp. 2d 1148, 1158 (2004) (“Under some circumstances, however, where the NME country has become a market economy, the post-NME values will best serve as representative of the values of the NME country as if it were a market economy.”). Indeed, the court in Nation Ford explicitly approved the notion of creating a “hypothetical” market economy to approximate the production experience of the PRC. Nation Ford, 166 F.3d at 1378. Consequently, Commerce’s calculation, at least in theory, produces Consolidated Ct. No. 05-00003 Page 71 a hypothetical wage rate for the PRC, which is therefore by definition a wage rate for a producer country at a comparable level of development, as required by 19 U.S.C. § 1677b(c)4. As such, so long as a reasonable mind can find that Commerce’s data choice in using the regression methodology constitutes the “best available information” in a particular case, nothing precludes Commerce from using sources outside a surrogate country to value the factors of production. Cf. Nation Ford, 166 F.3d at 1378 (the “best available information” test must be evaluated under the circumstances of the case). This, however, raises the main thrust of Respondents’ arguments here. Specifically, Respondents claim that (1) the manner in which Commerce created the regression model was arbitrary and therefore unsupported by substantial evidence; (2) the results of the regression model may be distorted; and (3) Commerce has failed to explain why it uses the PRC's GNI but not its wage rate. The court considers each claim in turn. (a) Creation of the Regression Model Commerce selected the wage rate data for its regression from the Yearbook of Labour Statistics, published by the International Labour Organization (ILO). Remand Determination at 5. Commerce follows a three-step process in choosing which data it will use. First, Commerce establishes a minimum standard for data. Under this standard, Commerce will only use data if that data is (i) less than Consolidated Ct. No. 05-00003 Page 72 five years old; (ii) reports wages for both male and female employees; and (iii) covers "different types of industr[ies]." Remand Determination at 6. Next, because the ILO database includes multiple expressions of wage rates, Commerce must choose which data meeting its minimum threshold it will use for a particular country. Commerce prioritizes data using the following criteria (in this order of precedence): (i) "’[w]orker [c]overage,’ i.e., coverage of different types of workers, such as wage earners or salaried employees"; (ii) "’[t]ype of [d]ata,’ i.e., the unit of time for which the wage is reported, such as per hour or per month”; and (iii) "’[s]ource ID,’ i.e., a code for the source of the data." Id. Within each factor, Commerce has preferences. For example, Commerce "generally prioritizes 'wage earners,' 'employees' and 'total employment,' in that order for the parameter 'Worker Coverage.'" Id. at 7. "Finally, it is the Department's normal practice to eliminate aberrational values (i.e., values that vary in either direction in the extreme from year to year) from the wage rate dataset" Id. Using these criteria, Commerce used the wage rate data of fifty-four countries.28 Here, Commerce has acknowledged (a) the desirability of a broader data set in its own justification for the creation and 28 The initial data set that Commerce employed in this investigation had fifty-six countries. In the Remand Determination, Commerce determined that the data from two countries were not reliable. Remand Determination at 13. As a result, the data set employed in December 2004 consisted of only fifty-four countries. Consolidated Ct. No. 05-00003 Page 73 utilization of a regression model for wage rates, see Def.’s Br. 21 (“Due to the variability of wage rates in countries with similar per capita GNI, a more accurate result would be obtained by utilizing data from multiple countries.”)(citations omitted); id. at 5 & 24 (“A relatively broad data set helps to prevent bias and ensure that the regression is statistically sound.”); Rules and Regulations 19 CFR Parts 351, 353 and 355, Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296 at 27,367 (May 19, 1997) (“Preamble 19 CFR § 351”) (“averaging of multiple data points . . . should lead to more accurate results. . . .”); (b) that additional countries for which it had available data (may have) met its selection criteria, Final Determination, 69 Fed. Reg. 67,313, 67,317; Issues & Decision Mem., P.R. Doc. 1933 at 180 (Cmt. 23)29; and (c) use of these additional countries would yield a better result than a regression model without such countries, id. Under such circumstances, Commerce’s exclusion of the countries that met its own selection criteria was arbitrary and therefore unsupported by substantial evidence. Accordingly, Commerce’s regression model cannot constitute 29 Specifically Commerce stated: the Department agrees in part with Dorbest that a recalculation of the regression analysis may require the Department to expand the basket of countries it includes in its regression analysis. A review of the data shows, however, that it may be appropriate to include substantially more than the nineteen countries which Dorbest identifies. Issues & Decision Mem., P.R. Doc. 1933 at 180 (Cmt. 23). Consolidated Ct. No. 05-00003 Page 74 the “best available information.” Indeed, even if the statute did not require the use of “best available information” an arbitrary application of selection criteria is inherently unreasonable and, therefore, renders the conclusion unsupported by substantial evidence. Cf. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48 (1983). Nor can Commerce hide behind its own regulation - Commerce’s regulation, when interpreted, must yield a reasonable interpretation of the statute. Arbitrariness is inherently unreasonable. Cf. Allied Pac. Food (Dalian) Co. v. United States, 30 CIT ___,___, Slip Op. 06-89 at 48 (June 12, 2006) (finding non-adherence to selection criteria to be reversible error). Unsurprisingly then, Commerce does not contest this premise. Instead, Commerce stated that it would not increase the data set here because: (i) such an undertaking would require a significant change in the data set that should be subject to comment from the general public; and (ii) this would require more time than w [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/818337. Public record. Not legal advice.