Three cases being argued at the Federal Circuit in December attracted amicus briefs. One of these cases is Mid Contintent Steel & Wire, Inc. v. United States, a trade case. In it, PT Enterprise Inc. and related Taiwanese nail producers appeal a decision of the Court of International Trade, which sustained findings of the Department of Commerce. In particular, PT Enterprise asks the Federal Circuit to determine whether the Department of Commerce’s differential pricing methodology, which determines whether there is a significant difference between pricing patterns, is supported by substantial evidence and otherwise in accordance with law. This is our argument preview.
In its opening brief, PT Enterprise challenged the methodology the Department of Commerce uses “to determine whether price differences are significant” in antidumping cases. PT Enterprise argued that the Department of Commerce’s reliance on simple averaging to “calculate the denominator” in its differential pricing analysis is “not supported by substantial evidence and is contrary to law.” According to PT Enterprise, the Department’s authority “expressly recognizes that simple averaging cannot be used . . . when test and comparison groups are different in size.” PT Enterprise further contended “academic literature” does not allow for simple averaging because “simple averaging elevates the important of small quantity sales” beyond “their actual impact.” By adopting a simple averaging approach, PT Enterprise argued, “an exporter could readily exploit the flaw,” thereby “enabling substantial targeting dumping to go undetected.” PT Enterprise also emphasized that “both Commerce and the courts have repeatedly and correctly recognized that relying on weighted averaging of data leads to accurate results.”
In its response brief, Mid Continent argued that PT Enterprise “prefers use of a weighted average” solely because doing so would “eliminate the dumping margin and require revocation of the antidumping order.” Defending the Department of Commerce’s determination, Mid Continent asserted the Department provided a “reasonable justification” for its approach and for “its determination to depart” from the methodology reflected in the “acknowledged literature.” Mid Continent further contended the Department of “Commerce identified and relied on uncontested principles” underlying its analysis. According to Mid Continent, the method is reasonable because the Department of “Commerce’s goal is to measure an abstract effect . . . in the test group.” Mid Continent also maintained the Department’s approach adheres to the governing statute, which directs it “to identify differences in prices . . . without regard to other aspects of the transactions,” such as “the size of the sale.” Finally, Mid Continent argued, the Department’s use of a simple average “avoids distorting the analysis” and “ensures that equal weight is given to the pricing behavior of both groups being compared.”
In its reply brief, PT Enterprise argued that the Department of Commerce and Mid Continent “have failed to justify” the underlying decision to use simple averaging rather than alternatives “proposed by
the Federal Circuit in earlier rounds of the case. PT Enterprise concedes “the academic literature arguably supports the proposition that [simple averaging] is a mathematically sound methodology,” but only when “when the two groups being compared are of equal size.” Because that condition is not met here, PT Enterprise maintained, simple averaging is “unavailing.” Finally, PT Enterprise emphasized, although the Department of Commerce concluded simple averaging “is permissible,” it did “not take the next essential step of establishing why [simple averaging] is a reasonable methodology, much less that this methodology [is] consistent with the best reading of the Tariff Act.”
Two amicus briefs have been filed in this case.
The Government of Canada and several Canadian lumber producers filed an amicus brief in support of PT Enterprise and reversal, arguing the “statistics literature is clear” that simple averaging is “appropriate only if the test and comparison groups are equal in size.” Notably, the amici argued, “Commerce has accepted (under protest) that the literature does not support simple averaging” when group sizes differ. The amici further contended the Department of “Commerce’s explanations” on its departure from the literature “are unreasonable, internally inconsistent, and at odds with basic principles of statistics.”
The Committee Overseeing Action for Lumber International Trade Investigations or Negotiations filed an amicus brief in support of the government and affirmance. The Committee argued “the conditions for the use of simple (and weighted) averages apply differently” when answering the “statutory question the differential pricing methodology is designed to answer.” In fact, the Committee explained, “the question addressed by much of the academic literature . . . is not relevant” to the underlying determination. Disputing the view of the other amici, the Committee argued they “rely on a limited number of academic statistical sources” while disregarding the fact “that the context . . . is quite different” from the “data that these sources are addressing.” The Committee defended the Department of Commerce’s determination by asserting it “draws from the principles” in the literature “and applies them to the specific situation of the statutory criteria.”
Oral argument is scheduled to be heard on Monday, December 1 at 10:00 am in Courtroom 201.