Viraj Group, Ltd. v. United States of America and Carpenter Technology, Corp., et al.
FINAL RESULTS OF REDETERMINATION PURSUANT TO COURT REMAND
The Department of Commerce ("the Department") has prepared these final results of redetermination pursuant to the remand order of the Court of International Trade in Viraj Group, Ltd. v. United States of America and Carpenter Technology, Corp., et al., Slip Op. 02-24 (CIT February 26, 2002). In accordance with the Court's instructions, we have re-examined the remanded issue of the Stainless Steel Wire Rod from India: Final Results of Antidumping Duty Administration Review, 65 FR 31302 (May 17, 2000). Specifically, we have explained our reasoning behind our approach to the devaluation of the Indian rupee during the POR, and explained that our currency conversion methodology resulted in an accurate dumping margin.
On January 11, 2000, the Department published Stainless Steel Wire Rod from India; Final Results of Antidumping Duty Administration Review, 65 FR 31,302 ("Final Results") covering the period of review ("POR") December 1, 1997 - November 30, 1998. This administrative review involved one Indian producer/exporter, Viraj Group, Ltd., ("Viraj") which consisted of three companies during the POR. Viraj contested various aspects of the Final Results.
On August 15, 2001, the Court issued its opinion in regard to the issues raised by Viraj. In its decision, the Court remanded one aspect of the Final Results. The Court remanded the issue of the exchange rate used by the Department to convert Indian rupees into United States dollars and whether an inaccurate margin resulted. The Court ordered the Department to articulate its reasoning behind its approach to the devaluation on the Indian rupee during the POR and to properly address and explain whether the Department currency conversion methodology resulted in an accurate dumping margin, and to recalculate the margin if necessary.
On October 2, 2001, the Department issued to the Court its Final Results of Redetermination Pursuant to Court Remand. In its response to the Court's remand, the Department explained that its currency conversion methodology was accurate, and the employment of an alternative methodology was unjustified. The Department cited previous cases in which the fact pattern, in marked contrast to the instant case, reasonably motivated an alternative methodology.
On February 26, 2002, the Court again remanded this aspect of the Final Results to the Department. In its opinion, the Court requested that the Department reconsider whether its currency conversion methodology resulted in a fair dumping determination. Specifically, the court instructed the Department (1) to examine whether its current currency conversion methodology yields the most accurate dumping margin in this case, (2) to address whether the facts of this case warrant additional consideration of the Department's policy concerning depreciating currencies, and if necessary recalculate Plaintiff's dumping margin, (3) to explain the Department's methodology for currency conversion with regard to sales versus costs, and (4) to explain how a long-term currency devaluation can be ignored by the Department if it is to reach a fair and accurate dumping margin.
We have considered and addressed the Court's four instructions and continue to find that no change in our results is justified. Because the Court seeks to know whether the Department's currency conversion methodology is the "most accurate method available to reach a dumping margin...," we have explained for the court why the Department's currency conversion methodology and its application to the facts on the record remains the best for calculating a fair and accurate dumping margin.
The Department's dumping analysis rests on the principle of price discrimination. To calculate a dumping margin, the Department must examine the producer's pricing decision at the time of a sale to the U.S., i.e., the date on which the producer decides and fixes the quantity and price of the merchandise to be sold. A fair and accurate measurement of the extent of dumping requires that the price conversion factor used for comparing prices in different currencies be as close as possible to the exchange rate the exporter had in mind when the exporter set the U.S. price. Absent evidence to the contrary, or a basis to conclude otherwise, an exporter sets its U.S. price based on the exchange rate that is contemporaneous with the U.S. price. Thus, relying on the exchange rate contemplated on the date on which potential price discrimination occurs ensures the Department a consistent, fair, and accurate basis upon which to compare pricing practices between markets. Viraj would have the Department stray from this principle and examine the profitability of a sale instead. However, this is not the intent of the statute. Nor would Viraj propose such a departure had the Indian rupee appreciated significantly over the POR and thus posed the prospect of a greater dumping margin under its proposed method. (1)
In the instant review, the record demonstrates that nothing relates the terms and conditions established at the time of Viraj's sale to the exchange rate (actual or expected) at the time of payment or delivery. We therefore conclude that Viraj's claim is merely an attempt to incorporate a fortuitous drop in the exchange rate into the dumping margin calculation. As explained above, a fair and accurate calculation should not include exchange rate gains or losses on the sale that were not anticipated at the time of sale, i.e., when price and quantity were set. There is nothing to suggest that currency revaluations after the time of sale, whether positive or negative, factor into any of the pricing decisions made by Viraj. For instance, if an exporter establishes a currency transaction on forward markets directly related to the sale of the subject merchandise, Section 773A (a) of the Statute allows the Department to consider an alternative exchange rate. However, Viraj did not act in any way to hedge the risk of revaluing currencies through the purchase of futures contracts or any other financial instrument. Moreover, Viraj never discussed or provided any evidence of "forward-thinking" pricing.
The Court asks how a "long-term substantial declination can be ignored" in the Department's efforts to calculate "an accurate and fair dumping margin and not embrace an absurd result." The basic answer is that it played no role in Viraj's pricing decision when it made the sale to the U.S. The facts on the record submitted by interested parties, including plaintiff, provide no evidence demonstrating that Viraj's pricing practices anticipate any particular changes in currency values after a sale. To adjust the margin calculation to account for a practice that does not exist would amount to crediting (or potentially penalizing) Viraj for the incidental gain (or loss) in local currency revenue owing to unforeseen movements in exchange rates and ignoring the best exchange rate information known at the time it sold the merchandise to the United States. Thus, the facts and circumstances on the record in the instant review do not motivate any general consideration of the issue of depreciating currencies, as the Court invites Commerce to do.
Concerning the Court's inquiry into the appropriateness of the Department's cost calculations, the Department does not apply any exchange rate in calculating a respondent's cost of production. Any conversions of costs incurred in foreign currencies are made by the respondent based on its own accounting practices, and the respondent reports its cost of production to the Department in the home market currency. The Department compares submitted cost data, reported in the home market currency, with home market sales, also in the home market currency, to determine which sales to exclude from consideration. Therefore, no currency conversion is done by the Department. Also, the Department uses cost data to construct a value in the absence of a suitable comparison sale in the comparison market. The appropriate exchange rate is employed to convert the constructed value and compare it to the U.S. sale just as we would convert a comparison market price. Thus, the comparison follows the same principle of using the date of sale, and the corresponding daily exchange rate, as discussed above. Viraj's date of sale is the point at which it not only decides and fixes the price, but also the date at which it assesses its costs and makes its competitive, economic decision to complete the sale. This is the date at which price discrimination, and thus dumping, occurs. Viraj's subsequent currency gains and losses on the sale following this date (i.e., date of sale) are simply immaterial to the Department's calculation of dumping margins.
WEIGHTED-AVERAGE DUMPING MARGIN
As a result of this redetermination, we have not recalculated the dumping margin for Viraj. Therefore the margin remains as follows:
Viraj Group, Ltd. 11.88%