On December 11, 2017, the Supreme Court denied certiorari of Papierfabrik August Koehler SE’s (“Koehler”) appeal of the Department of Commerce’s (“Commerce”) use of total adverse facts available (“AFA”) in assigning the company a dumping margin. The decision signaled the Court’s acceptance of the agency’s far-reaching discretion to use AFA as a tool in investigating antidumping allegations. The Supreme Court issued a lengthy 23-page denial of certiorari, and that denial will have significant implications on how Commerce will treat non-cooperating parties in its antidumping investigations.
When calculating the extent to which foreign producers (“respondents”) are alleged to have sold subject merchandise at less than fair value in the United States, Commerce relies on data submitted by each of the foreign producers being examined. If Commerce determines that a respondent has failed to cooperate with Commerce’s inquiry, including failing to provide complete responses or improperly concealing, altering, or omitting data, Commerce may calculate a margin using facts available with adverse inferences, or AFA. For example, if Commerce determines that some portion of a respondent’s information is unreliable or unverifiable, it may select a relevant sample of the data that is most unhelpful to the respondent (i.e., a particular cost of an input) from the record to apply across the board for that aspect of Commerce’s calculations. Commerce will, in some instances, determine that a company has been so wholly uncooperative that its data (to the extent any has been provided) will be disregarded in favor of a non-calculated AFA rate, typically selected from the petition in the original investigation or some segment of the same case during an administrative review.
The AFA provisions of the trade remedies law reflect the position that a non-cooperative party should not be in a better position for having not acted to the best of its ability in responding to Commerce’s questions. The practice is designed to encourage comprehensive, accurate, and truthful submissions of data.
In the recent case, Koehler a German paper company, requested that the Supreme Court overturn a dumping margin that was based on the application of total AFA, and the rejection of information submitted by the respondent. Koehler claimed that the adverse rate, which produced a dumping margin of 75.36%, was “impermissibly punitive.” The margin was assigned in an administrative review of an existing antidumping duty order on lightweight thermal paper from Germany after Commerce discovered that Koehler was transshipping goods subject to the order. The sales that were transshipped through a third country were not represented in Koehler’s response to Commerce, and Commerce determined that the omission distorted the company’s information and rendered its data unreliable. Commerce further declined the option to use any of Koehler’s provided data, despite some of it being “unaffected” by the transshipment scheme. Koehler’s overall credibility was in question given the deliberate falsification of some of its sales data.
Koehler argued in its appeal to the Supreme Court that Commerce erred in applying total or partial AFA; selecting the applicable rate; and failing to corroborate the petition margin. The Court rejected each of Koehler’s arguments and determined that Commerce was justified in applying AFA. The Court noted that in the 2015 amendments to the AFA provisions, Congress intended to provide Commerce with even more discretion than it had previously in applying, selecting, and corroborating adverse rates.