                         Slip Op. 12 - 137

              UNITED STATES COURT OF INTERNATIONAL TRADE

CAMAU FROZEN SEAFOOD
PROCESSING IMPORT EXPORT
CORPORATION, et al.,

         Plaintiffs,

              v.
                                            Before: Donald C. Pogue,
UNITED STATES,                                      Chief Judge

         Defendant,                         Consol. Court No. 11-003991

              and

AD HOC SHRIMP TRADE ACTION
COMMITTEE and AMERICAN SHRIMP
PROCESSORS ASSOCIATION,

         Defendant-Intervenors.

                                  OPINION

[affirming, in part, and remanding, in part, final results of
administrative review of antidumping duty order]

                                               Dated: November 15, 2012

          Matthew R. Nicely, David S. Christy, and David J.
Townsend, Thompson Hine LLP, of Washington, DC, on behalf of
Plaintiffs Camau Frozen Seafood Processing Import Export Corp.;
Minh Phu Seafood Corp.; Minh Phat Seafood Co., Ltd.; Minh Qui
Seafood Co., Ltd.; and Viet I-Mei Frozen Foods Co., Ltd.

          Joshua E. Kurland, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, on behalf of Defendant. With him on the briefs
were Stuart F. Delery, Acting Assistant Attorney General; Jeanne
E. Davidson, Director; and Patricia M. McCarthy, Assistant
Director. Of counsel on the briefs was Jonathan Zielinski,
Senior Attorney, Office of the Chief Counsel for Import
Administration, U.S. Department of Commerce, of Washington, DC.


     1
       This action is consolidated with Court No. 11-00383.
Order, Dec. 20, 2011, ECF No. 30.
Consol. Court No. 11-00399                                   Page 2

          Andrew W. Kentz, Jordan C. Kahn, and Nathaniel M.
Rickard, Picard Kentz & Rowe LLP, of Washington, DC, for the
Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee.

          Terence P. Steward, Geert M. De Prest, Elizabeth J.
Drake, Jumana M. Misleh, and Stephanie R. Manaker, Stewart and
Stewart, of Washington, DC, and Edward T. Hayes, Leake &
Andersson, LLP, of New Orleans, LA, for the Defendant-Intervenor
American Shrimp Processors Association.

          Pogue, Chief Judge: This is a consolidated action

seeking review of determinations made by the United States

Department of Commerce (“Commerce”) in the fifth administrative

review of the antidumping duty order covering certain frozen

warmwater shrimp from the Socialist Republic of Vietnam

(“Vietnam”).2   Currently before the court are motions for

judgment on the agency record submitted by Respondents Camau

Frozen Seafood Processing Import Export Corp., et al.,

(collectively “Respondents”) and Petitioner Ad Hoc Shrimp Trade

Action Committee (“AHSTAC”).   Respondents challenge Commerce’s

decision to zero in this administrative review after it ceased

zeroing in investigations; AHSTAC challenges Commerce’s choice of

Bangladesh as the primary surrogate country and Commerce’s

decision to value labor using only data from the Bangladesh


     2
       Certain Frozen Warmwater Shrimp from the Socialist
Republic of Vietnam, 76 Fed. Reg. 56,158 (Dep’t Commerce Sept.
12, 2011) (final results and final partial rescission of
antidumping duty administrative review) (“Final Results”), and
accompanying Issues & Decision Memorandum, A-552-802, ARP 09–10
(Aug. 31, 2011), Admin. R. Pt. 2 Pub. Doc. 9, available at
http://ia.ita.doc.gov/frn/summary/VIETNAM/2011-23278-1.pdf (last
visited Nov. 13, 2012) (“I & D Mem.”) (adopted in Final Results,
76 Fed. Reg. at 56,159).
Consol. Court No. 11-00399                                   Page 3

Bureau of Statistics.

          As explained below, the court (1) affirms Commerce’s

explanation for continuing to zero in reviews but not in

investigations; (2) does not reach Commerce’s choice of

Bangladesh as the primary surrogate country; and (3) remands

Commerce’s decision to value labor using only data from the

Bangladesh Bureau of Statistics.

          The court has jurisdiction pursuant to

§ 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19

U.S.C. § 1516a(a)(2)(B)(iii) (2006)3 and 28 U.S.C. § 1581(c)

(2006).



                             BACKGROUND

          Commerce has designated Vietnam as a non-market economy

country (“NME”).   When investigating potentially dumped

merchandise from an NME, Commerce considers the NME data for

measuring normal value4 to be unreliable.   Therefore, Commerce

calculates normal value for merchandise from an NME using

surrogate values for factors of production drawn from a market

economy country. 19 U.S.C. § 1677b(c)(1).   In general, Commerce


     3
       All further citations to the Tariff Act of 1930, as
amended, are to Title 19 of the U.S. Code, 2006 edition.
     4
       An antidumping duty equal to “the amount by which the
normal value exceeds the export price” may be assessed on
merchandise sold at less than fair value in the United States. 19
U.S.C. § 1673.
Consol. Court No. 11-00399                                   Page 4

prefers to draw all surrogate values from a single surrogate

country (the “primary surrogate country”). Import Administration

Policy Bulletin No. 04.1, Non-Market Economy Surrogate Country

Selection Process (Mar. 1, 2004), available at

http://ia.ita.doc.gov/policy/bull04-1.html (last visited Nov. 15,

2012) (“Policy Bulletin 04.1”).    In this review, Commerce chose

Bangladesh as the primary surrogate country and rejected AHSTAC’s

preferred choice, the Philippines. I & D Mem. cmt. 1 at 3–5.

          In the past, Commerce has deviated from its general

surrogate value policy when choosing surrogate values for labor.

Rather than drawing surrogate labor values from the primary

surrogate country, Commerce historically valued labor by

averaging labor values from multiple countries.    While this

review was pending, Commerce changed its policy to value labor

solely on the basis of data from the primary surrogate country.

Antidumping Methodologies in Proceedings Involving Non-Market

Economies: Valuing the Factor of Production: Labor, 76 Fed. Reg.

36,092 (Dep’t Commerce June 21, 2011) (“New Labor Methodology”).

In light of its new policy, Commerce sought additional comments

from interested parties on how to value labor in the instant

review. I & D Mem. at 2.     After reviewing the comments, Commerce

chose to value labor consistent with the New Labor Methodology by

using data solely from the primary surrogate country, Bangladesh.

Id. at cmt. 2.I at 21–24.
Consol. Court No. 11-00399                                  Page 5

          Furthermore, when calculating the weighted average

dumping margin in this review, Commerce chose to zero dumping

margins with negative values. Id. at cmt. 3 at 32.5   At the time

of this review, Commerce’s practice of zeroing in administrative

reviews differed from its practice of offsetting in antidumping

investigations, where it allowed dumping margins with negative

and positive values to offset each other when calculating the

weighted average dumping margin. Id. at 30–32.6   However, in

February of this year, Commerce published a new policy regarding

the use of zeroing in administrative reviews. Antidumping

Proceedings: Calculation of the Weighted-Average Dumping Margin

and Assessment Rate in Certain Antidumping Duty Proceedings;

Final Modification, 77 Fed. Reg. 8101 (Feb. 14, 2012) (“Final

Modification”).   In the Final Modification, Commerce stated that




     5
       This issue has been the subject of much recent litigation,
and further background on the issue and its development can be
found in Grobest & I-Mei Indus. (Vietnam) Co. v. United States,
36 CIT __, 853 F. Supp. 2d 1352 (2012) (“Grobest II”) and Union
Steel v. United States, 36 CIT __, 823 F. Supp. 2d 1346 (2012).
     6
       See also Grobest II, 36 CIT at __, 853 F. Supp. 2d at
1360–61 (“Pursuant to both methodologies, Commerce calculates the
§ 1677(35)(A) dumping margin by subtracting the export price from
normal value for each averaging group [of subject merchandise].
Once a dumping margin has been established, Commerce aggregates
these dumping margins to determine a weighted average dumping
margin. In an investigation, Commerce aggregates all of the
dumping margins to determine ‘overall pricing behavior.’ In a
review, Commerce zeros negative margins prior to aggregation to
arrive at a more accurate margin and to uncover masked dumping.”
(citation omitted)).
Consol. Court No. 11-00399                                  Page 6

     the Department is adopting the proposed changes to its
     methodology for calculating weighted-average margins of
     dumping and antidumping duty assessment rates to
     provide offsets for non-dumped comparisons when using
     monthly [average-to-average] comparisons in reviews, in
     a manner that parallels the WTO-consistent methodology
     the Department currently applies in original
     antidumping duty investigations.

Id. at 8102.   Therefore, as of April 16, 2012, Commerce ceased

zeroing, in general, consistent with the policy announced in the

Final Modification.



                        STANDARD OF REVIEW

          When reviewing Commerce’s decisions in administrative

reviews of antidumping duty orders, the Court “shall hold

unlawful any determination, finding, or conclusion found . . . to

be unsupported by substantial evidence on the record, or

otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i).



                             DISCUSSION

I.   Zeroing

          Turning first to the issue of zeroing, Respondents

challenge Commerce’s decision to employ zeroing in administrative

reviews but not in investigations.   But the explanation Commerce

provided in this review is the same as that previously held to be

both reasonable and consistent with the Court of Appeals for the
Consol. Court No. 11-00399                                  Page 7

Federal Circuit’s decisions in Dongbu Steel Co. v. United States,

635 F.3d 1363 (Fed. Cir. 2011) and JTEKT Corp. v. United States,

642 F.3d 1378 (Fed. Cir. 2011). See Grobest II, 36 CIT at __, 853

F. Supp. 2d at 1356–62; see also Far E. New Century Corp. v.

United States, 36 CIT __, Slip Op. 12-110, *6–7 (Aug. 29, 2012).

In Grobest II, the court found the relevant statute ambiguous and

Commerce’s rationale for employing differing methodologies in

investigations and reviews to be a reasonable interpretation of

the statute. Grobest II, 36 CIT at __, 853 F. Supp. 2d at

1358–62.

           Respondents also raise an issue in this case that was

not decided in Grobest II.   Specifically, Respondents challenge

Commerce’s reliance on the goal of identifying masked dumping as

a basis for Commerce’s continued use of zeroing in administrative

reviews.   Respondents argue that it is inappropriate for Commerce

to rely on this rationale in light of Commerce’s new policy of

not zeroing in administrative reviews.7 Mem. of Law Supp. Pls.’



     7
       In Grobest II, the defendant-intervenors raised this issue
in their comments to the court on Commerce’s remand results.
Because the issue had not been raised in comments to Commerce on
the Department’s draft remand results, the court found that
defendant-intervenors had failed to exhaust their administrative
remedies and declined to consider the argument. Grobest II, 36
CIT at __, 853 F. Supp. 2d at 1361 n.10. Here, while Respondents
have not previously raised this argument before Commerce, they
had no opportunity because the new policy was published on
February 12, 2012, following the publication, on September 12,
2011, of the Final Results. Therefore, the exhaustion doctrine
does not apply in this case.
Consol. Court No. 11-00399                                   Page 8

Rule 56.2 Mot. J. Agency R. at 15, ECF No. 40 (“Resp’ts’ Br.”).

           Respondents focus on language in the Final Modification

where Commerce states that “the Department disagrees with those

comments that suggest it is not capturing 100 percent of the

dumping” and that “the Department does not agree that the

potential for masked dumping means that [average-to-average]

comparisons are unsuitable as the default basis for determining

the weighted-average dumping margins . . . in reviews.” Final

Modification, 77 Fed. Reg. at 8106, 8104; Resp’ts’ Br. at 15–16.8

Taken together, Respondents argue, these statements show that

Commerce concedes it can capture 100 percent of dumping without

zeroing; therefore, masked dumping is not a reasonable concern

that can support alternative methodologies in investigations and

reviews.

           Respondents, however, do not recognize the full extent

of Commerce’s reasoning in the Final Modification.   First,

Commerce does not argue that it can capture 100 percent of

dumping with its new average-to-average offsetting methodology

for reviews; rather, Commerce argues that it “will capture 100

percent of the dumping that is determined to exist pursuant to



     8
       Respondents also argue that the methodology announced in
the Final Modification is arbitrary and unreasonable because
Commerce reserves the right to apply an alternative methodology
when it believes such is appropriate. Resp’ts’ Br. at 15–16. But
Commerce’s application in future cases is not at issue in this
case.
Consol. Court No. 11-00399                                    Page 9

this methodology.” Final Modification, 77 Fed. Reg. at 8106

(emphasis added).   Furthermore, Commerce has not abandoned its

concern about masked dumping.   On the contrary, Commerce has

changed its approach to masked dumping by deciding to pursue

masked dumping on a case-by-case basis. Id. at 8104 (“Similar to

the conduct of original investigations, when conducting reviews

under the modified methodology, the Department will determine, on

a case-by-case basis, whether it is appropriate to use an

alternative comparison methodology . . . .”).

          When examined in full, Commerce’s reasoning in the

Final Modification does not indict the rationale behind its prior

policy of zeroing in reviews but not in investigations.    Commerce

has made a change in policy and priority.   The new policy

announced in the Final Modification responds to a series of

adverse World Trade Organization (“WTO”) decisions finding that

Commerce’s zeroing methodology in reviews was inconsistent with

the General Agreement on Tariffs and Trade (“GATT”) and the

Agreement on Implementation of Article VI of the GATT 1994. Id.

at 8101–02.   To adhere to these adverse findings, Commerce,

pursuant to 19 U.S.C. § 3533(g), changed its policy.   When

Commerce stated that the new policy would “capture 100 percent of

the dumping that is determined to exist pursuant to this

methodology,” Final Modification, 77 Fed. Reg. at 8106, it was

acknowledging that some dumping could go uncaptured.   While
Consol. Court No. 11-00399                                 Page 10

Commerce remains concerned about masked dumping, and will pursue

it on a case-by-case basis, Commerce adopted a new methodology

that may capture less masked dumping in order to conform with

adverse WTO rulings.

           This new policy does not undermine Commerce’s rationale

for the prior policy.   Commerce remains concerned about masked

dumping but has determined it cannot pursue its prior approach to

masked dumping and conform to the adverse WTO rulings.   Going

forward, Commerce has chosen to pursue the latter objective over

the former.   This change in objective does not make the prior

policy unreasonable, just as Commerce previously “adjust[ed] its

methodology to seek overall pricing behavior in investigations

and more accurate duties in reviews, by zeroing in reviews but

not in investigations,” without being unreasonable, Grobest II,

36 CIT at __, 853 F. Supp. 2d at 1361–62.

           For the foregoing reasons, the court will follow its

recent opinions in Grobest II and Far E. New Century on the issue

of zeroing and affirm Commerce’s explanation as reasonable.

II.   Surrogate Country Choice

           In its first of two challenges, AHSTAC contends that

Commerce improperly selected Bangladesh as the primary surrogate

country.   Specifically, AHSTAC challenges Commerce’s policy of

considering all countries designated economically comparable to

the NME under investigation to be equally economically
Consol. Court No. 11-00399                                   Page 11

comparable.   AHSTAC, however, did not raise this issue before

Commerce, even though the issue was clearly in play and AHSTAC

had an opportunity to raise its challenge during the

administrative review.   Therefore, the court will not reach this

issue because AHSTAC failed to exhaust its administrative

remedies.

            In actions challenging antidumping determinations, “the

Court of International Trade shall, where appropriate, require

the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d).

Exhaustion is “generally appropriate in the antidumping context

because it allows the agency to apply its expertise, rectify

administrative mistakes, and compile a record adequate for

judicial review — advancing the twin purposes of protecting

administrative agency authority and promoting judicial

efficiency.” Carpenter Tech. Corp. v. United States, 30 CIT 1595,

1597, 464 F. Supp. 2d 1347, 1349 (2006) (quoting Carpenter Tech.

Corp. v. United States, 30 CIT 1373, 1374–75, 452 F. Supp. 2d

1344, 1346 (2006)).   For these reasons, parties are “procedurally

required to raise the[ir] issue before Commerce at the time

Commerce [is] addressing the issue.” Dorbest Ltd. v. United

States, 604 F.3d 1363, 1375 (Fed. Cir. 2010) (alteration in

original) (citing Mittal Steel Point Lisas Ltd. v. United States,

548 F.3d 1375, 1383 (Fed. Cir. 2008)).

            In its case brief to Commerce, AHSTAC argued that the
Consol. Court No. 11-00399                                   Page 12

Philippines should be the surrogate country solely because its

surrogate value data was superior to the Bangladeshi data. AHSTAC

Case Br., A-522-802, ARP 09–10 (Apr. 18, 2011), Admin. R. Pt. 1

Pub. Doc. 166 at 1–11.    Commerce was not persuaded and selected

Bangladesh as the primary surrogate.    At no point did AHSTAC

contend that the difference in GNI between Bangladesh and the

Philippines (or the difference between either potential surrogate

country and Vietnam) was relevant to the surrogate country

selection.    In other words, AHSTAC never argued that one country

was more economically comparable to Vietnam than the other.

             The issue of economic comparability became important

for AHSTAC when Commerce decided to apply its New Labor

Methodology in this administrative review because this meant

Commerce would value labor using data from the primary surrogate

country, Bangladesh, rather than using multi-country averaging or

data from AHSTAC’s preferred source, the Philippines.

Nevertheless, when Commerce invited comments on the application

of the New Labor Methodology in this review, Letter from Commerce

to Interested Parties, A-552-802, ARP 09-10 (June 23, 2011),

Admin. R. Pt. 1 Pub. Doc. 173 (“Labor Letter”), AHSTAC did not

challenge Commerce’s finding of equal economic comparability

between Bangladesh and the Philippines in light of the New Labor

Methodology, see Producers Comments on Labor Rates, A-552-802,

ARP 09-10 (July 7, 2011), Admin. R. Pt. 1 Pub. Doc. 175
Consol. Court No. 11-00399                                  Page 13

(“AHSTAC’s Labor Methodology Comments”).   AHSTAC chose to argue

instead that Commerce should either 1) maintain its multi-country

averaging approach because it was consistent with prior Court of

International Trade case law, 2) choose the Philippines as the

surrogate country because the ILO Chapter 6A data Commerce said

it preferred in the New Labor Methodology was available from the

Philippines but not Bangladesh, or 3) value labor alone based on

data from the Philippines because ILO Chapter 6A data was

available and the Bangladeshi Bureau of Statistics data on wage

rates was unreliable. AHSTAC’s Labor Methodology Comments at 2–9.

          AHSTAC contends that exhaustion is not appropriate

because Commerce notified the parties that it intended to apply

the New Labor Methodology after the period for submission of

administrative case briefs had ended and requested narrowly

tailored comments within a short (two week) time frame. Pl. Ad

Hoc Shrimp Trade Action Comm.’s Reply Mem. at 12–13, ECF No. 72

(“AHSTAC’s Reply Br.”).   In AHSTAC’s view these procedures were

so exceptional and onerous that the court should exercise its

discretion to consider AHSTAC’s argument. Cf. Hormel v.

Helvering, 312 U.S. 552, 557 (1941) (“There may always be

exceptional cases or particular circumstances which will prompt a

reviewing or appellate court, where injustice might otherwise

result, to consider questions of law which were neither pressed

nor passed upon by the court or administrative agency below.”).
Consol. Court No. 11-00399                                  Page 14

          The court recognizes that such cases may exist, but

this is not one.   Though the period for additional comment may

have been short and the subject matter narrow, AHSTAC had ample

notice of the New Labor Methodology and a fair opportunity to

raise its concern about the presumption of equal economic

comparability.   But AHSTAC never raised its economic

comparability argument before Commerce.9   By not raising the

argument, AHSTAC deprived Commerce of the opportunity to “apply

its expertise, rectify administrative mistakes, [or] compile a

record adequate for judicial review” on the issue. Carpenter

Tech., 30 CIT at 1597, 464 F. Supp. 2d at 1349.

          By not raising the equal economic comparability

argument before Commerce, AHSTAC failed to exhaust its

administrative remedies with respect to this issue. See QVD Food

Co. v. United States, 34 CIT __, 721 F. Supp. 2d 1311, 1320–21

(2010) (finding a failure to exhaust administrative remedies



     9
       In its comments on valuing labor in this review, AHSTAC
did challenge the choice of Bangladesh as the primary surrogate
country and argued that Commerce should reconsider that decision
and choose the Philippines on the basis of the superior
Philippine data. AHSTAC’s Labor Methodology Comments at 4–5.
This challenge to primary surrogate country choice is no more
germane to the “narrow issue of the Department’s final labor rate
pursuant to [the New Labor Methodology],” AHSTAC’s Reply Br. at
12–13 (quoting Labor Letter at 2) (emphasis omitted), than an
argument challenging the economic comparability policy would have
been. Having argued surrogate country choice in its comments,
AHSTAC’s argument that it did not have an opportunity to comment
on economic comparability because the request for comment was so
narrowly tailored is not persuasive.
Consol. Court No. 11-00399                                   Page 15

where a party introduced, in its brief to the court, new

arguments not made before Commerce even though issues were

“squarely in play”), aff’d, 658 F.3d 1318 (Fed. Cir. 2011).

Accordingly, the court does not reach Commerce’s choice of

Bangladesh as the primary surrogate country.

III. Surrogate Labor Methodology

          AHSTAC also challenges Commerce’s decision to rely

solely on data from Bangladesh to value labor.   AHSTAC contends

both that the Bangladeshi labor rate is unsupported by

substantial evidence and that Commerce failed to adequately

explain its decision to change from a policy of valuing labor

using multi-country averaging to valuing labor based on data

solely from the primary surrogate country.10   As the latter is a

facial challenge to Commerce’s new policy, it will be addressed

first.

          When valuing factors of production, Commerce “shall

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).   Prior to the


     10
       AHSTAC also challenges the Bangladeshi labor data as
aberrationally low. As discussed below, Commerce’s choice of the
Bangladeshi data will be remanded because it is not supported by
substantial evidence; therefore, the court need not reach the
question of whether the Bangladeshi data is aberrational.
Consol. Court No. 11-00399                                Page 16

Court of Appeals’ decision in Dorbest Ltd. v. United States, 604

F.3d 1363 (Fed. Cir. 2010) (“Dorbest IV”), Commerce valued labor

using a regression based methodology described in 19 C.F.R.

§ 351.408(c)(3). Id. at 1367–68.   In Dorbest IV, the Court of

Appeals invalidated the regression based methodology, holding

that § 351.408(c)(3) “improperly requires using data from both

economically comparable and economically dissimilar countries,

and it improperly uses data from both countries that produce

comparable merchandise and countries that do not.” Id. at 1372.

          In response to Dorbest IV, Commerce established an

interim methodology that relied on a simple average of labor

rates from economically comparable countries that were also

significant producers of comparable merchandise. Dorbest Ltd. v.

United States, 35 CIT __, 755 F. Supp. 2d 1291, 1294–96 (2011)

(“Dorbest VI”); see also Antidumping Methodologies in Proceedings

Involving Non-Market Economies: Valuing the Factor of Production:

Labor; Request for Comment, 76 Fed. Reg. 9544, 9546–47 (Dep’t

Commerce Feb. 18, 2011) (“Request for Comment”).   Commerce’s

interim methodology was subsequently upheld by this Court on

several occasions. See Grobest & I-Mei Indus. (Vietnam) Co. v.

United States, 36 CIT __, 815 F. Supp. 2d 1342, 1356–60 (2012)

(“Grobest I”); Home Products Int’l, Inc. v. United States, 36 CIT

__, 810 F. Supp. 2d 1373, 1377–78 (2012); Shandong Rongxin Imp. &

Exp. Co. v. United States, 35 CIT __, 774 F. Supp. 2d 1307, 1314
Consol. Court No. 11-00399                                   Page 17

(2011).   While affirming multi-country averaging, Shandong also

narrowed the universe of countries available for Commerce to

average by holding that “Commerce’s interpretation of

‘significant’ encompasses countries which almost certainly have

no domestic production — at least not any meaningful production,

capable of having influence or effect — and is therefore an

impermissible construction of [the ‘significant producer’ test

in] 19 U.S.C. § 1677b(c)(4).” Shandong, 35 CIT at __, 774 F.

Supp. 2d at 1316.

           Following the Request for Comment, Commerce published

its New Labor Methodology, where it decided that in light of the

diminished sample size for averaging occasioned by Dorbest IV and

Shandong, it would value labor solely based on data from the

primary surrogate country. New Labor Methodology, 76 Fed. Reg. at

36,093.   Commerce applied the New Labor Methodology in this

review based on the same analysis, I & D Mem. cmt. 2.I at 23–24,

which AHSTAC now challenges.

           But changes in administrative policy are not subject to

heightened review. FCC v. Fox Television Stations, Inc., 556 U.S.

502, 514 (2009).    In other words, the agency is not required to

explain why a new policy is better than the old policy; it is

enough that the policy would have been justified if adopted new.

Id. at 514–15.     Thus, it is sufficient for the new policy to

reasonably fill a statutory gap left for agency decision making.
Consol. Court No. 11-00399                                      Page 18

Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837, 843–44 (1984).

             Commerce premises its change in policy, in both the

I & D Mem. and the New Labor Methodology, on the diminished

efficacy of multi-country averaging after Dorbest IV and

Shandong:

        [T]he Department concluded that to be compliant with
        the statute, and the two most recent court decisions,
        the base for an average wage calculation would be so
        limited (two countries in this case following the
        interim labor methodology) that there would be little,
        if any, benefit to relying on an average of wages from
        multiple countries for purposes of minimizing the
        variability that occurs in wages across countries.

I & D Mem. cmt. 2.I at 24; see also New Labor Methodology, 76

Fed. Reg. at 36,093.    Acknowledging its past policy and

addressing the problem that led it to reject multi-country

averaging provides a reasonable basis for Commerce’s policy

change. Cf. Fox Television, 556 U.S. at 515.     In light of Dorbest

IV and Shandong, Commerce cannot find enough countries that are

both economically comparable and significant producers of subject

merchandise to effectively average wages from multiple countries.

Thus, Commerce has provided a reasonable basis for abandoning its

prior policy, and the new policy is reasonable on its face.

             That Commerce’s decision to change policy may be

facially reasonable does not fully resolve the issue presented

here.    Commerce’s decision in this review, to value labor based

solely on Bangladeshi data, must also be supported by substantial
Consol. Court No. 11-00399                                  Page 19

evidence.   Substantial evidence is “such relevant evidence as a

reasonable mind might accept as adequate to support a

conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477

(1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229

(1938)).    And the “substantiality of evidence must take into

account whatever in the record fairly detracts from its weight.”

Id. at 488.

            In considering whether to value labor solely on the

basis of data from Bangladesh, Commerce did not reconsider its

prior findings that wage rates strongly correlate to GNI and,

therefore, require special consideration.   As Commerce stated

when it promulgated 19 C.F.R. § 351.408:

     [W]hile per capita GDP and wages are positively
     correlated, there is great variation in the wage rates
     of the market economy countries that the Department
     typically treats as being economically comparable. As
     a practical matter, this means that the result of an
     NME case can vary widely depending on which of the
     economically comparable countries is selected as the
     surrogate. . . . By avoiding the variability in results
     depending on which economically comparable country
     happens to be selected as the surrogate, the results
     are much fairer to all parties.

Antidumping Duties; Countervailing Duties, 61 Fed. Reg. 7308,

7345 (Dep’t Commerce Feb. 27, 1996) (proposed rules).11   In light


     11
       See also Request for Comment, 76 Fed. Reg. at 9545
(“[W]age data from a single surrogate country does not normally
constitute the best available information for purposes of valuing
the labor input due to the variability that exists across wages
from countries with similar GNI.”); Certain Frozen Warmwater
Shrimp from the People’s Republic of Vietnam, 75 Fed. Reg. 47,771
                                             (footnote continued)
Consol. Court No. 11-00399                                  Page 20

of Commerce’s prior findings, the facts on the record of this

case seem to highlight the very concerns about valuing labor on

the basis of a single surrogate country that Commerce has

repeatedly raised.   Specifically, taking into account the three

factors Commerce considers in choosing surrogate countries —

economic comparability, significant production of comparable

merchandise, and quality of data — Commerce had the following

points of comparison on the record of this case12:


     11
      (footnote continued)
(Dep’t Commerce Aug. 9, 2010) (final results and partial
rescission of antidumping duty administrative review) and
accompanying Issues and Decision Memorandum, A-552-802, ARP 08–09
(July 30, 2010) cmt. 9 at 27 (“[W]age data from a single
surrogate country does not constitute the best available
information for purposes of valuing the labor input due to the
variability that exists between wages and GNI. . . . As a result,
we find reliance on wage data from a single surrogate country to
be unreliable and arbitrary.”).
     12
       The following table includes the two countries that
Commerce determined satisfied all three criteria on the record of
this case. For the Preliminary Results of this review Commerce
employed its interim labor methodology. Certain Frozen Warmwater
Shrimp from the Socialist Republic of Vietnam, 76 Fed. Reg.
12,054, 12,062–63 (Dep’t Commerce Mar. 4, 2011) (preliminary
results, partial rescission, and request for revocation, in part,
of the fifth administrative review) (“Preliminary Results”).
Based on GNI, measured in per capita U.S. Dollars, Commerce found
thirty-five countries, falling between Bangladesh at the low end
and Indonesia at the high end, to be economically comparable to
Vietnam. Surrogate Values for the Preliminary Results, A-552-802,
ARP 09–10 (Feb. 28, 2011), Admin. R. Pt. 1 Pub. Doc. 144 at 6
(“Surrogate Value Mem.”). Of these thirty-five economically
comparable countries, Commerce determined that eighteen were also
significant producers of comparable merchandise, using its pre-
Shandong criteria for significant producers. Id. Of these
eighteen countries, three reported industry specific data under
Chapter 5B of the ILO dataset: Egypt, the Philippines, and
                                             (footnote continued)
Consol. Court No. 11-00399                                 Page 21

                  GNI (per capita USD)   Labor Rate (USD/hour)
    Philippines           1890                    1.91
       Vietnam             890                     --
     Bangladesh            520                    0.21

     12
      (footnote continued)
Indonesia. Id. at 7–8. If the Department’s preference for
industry specific data, as reported in ILO Chapter 6A or a
comparable form, see New Labor Methodology, 76 Fed. Reg. at
36,093–94, is taken into account, then Indonesia is removed from
the list. Finally, Egypt exported $39,251 of subject
merchandise in 2007 and had no reported exports in 2008 or 2009,
Ex. 6 to the Surrogate Value Mem.; therefore, it arguably fails
the Shandong significant producer test and should be removed.
          AHSTAC also introduced ILO 6A data and argued that
Guyana (GNI 1450/0.82 USD/hour), Nicaragua (GNI 1080/1.02
USD/hour), and India (GNI 1070/0.70 USD/hour) met the
economically comparable and significant producer tests.
Producers’ Rebuttal Factual Info., A-552-802, ARP 09-10 (July 15,
2011), Admin. R. Pt. 1 Pub. Doc. 180, at 3. Because Commerce
valued labor based on data from the primary surrogate country,
Bangladesh, there is no record in the Final Results or I & D Mem.
of whether Commerce considered the alternate AHSTAC values to
have met all the necessary prongs for consideration; nor,
therefore, is there a record decision for the court to review.
          The data in this table is drawn from the following
sources. GNI data is drawn from Request for Comments on
Surrogate Country Selection, A-552-802, ARP 09–10 (Aug. 20,
2010), Admin. R. Pt. 1 Pub. Doc. 82A, attach. 1. Labor rate data
for the Philippines is drawn from Ex. 6 to the Surrogate Value
Mem. Labor rate data for Bangladesh is drawn from the Final
Surrogate Value Mem., which states that the Bangladeshi labor
rate for the relevant period was 14.55 Bangladeshi Takas per
hour. Ex. 1 to the Final Surrogate Value Mem., A-552-802, ARP
09–10 (Aug. 31, 2011), Admin. R. Pt. 2 Pub. Doc. 3A. The average
exchange rate for Bangladeshi Takas to U.S. Dollars during the
first half of 2009, the period for which the Bangladeshi labor
rate was calculated, was 1.45%, as calculated by averaging the
daily buy rate of U.S. Dollars in Bangladeshi Takas provided by
Bangladesh Bank, the Central Bank of Bangladesh, from January 1,
2009, to June 30, 2009. See Bangladesh Bank, Exchange Rates,
http://www.bb.org.bd/econdata/exchangerate.php (use drop down
menus under “search previous data from archive” to retrieve daily
historical exchange rates with the U.S. Dollar) (last visited
Nov. 14, 2012). Converting 14.55 Bangladeshi Takas at a rate of
1.45% results in a labor rate of $0.210975 or $0.21 per hour.
Consol. Court No. 11-00399                                    Page 22

          The data in this table places the Department’s prior

arguments regarding disparate wage rates across countries

presumed to be equally economically comparable into sharp relief.

Insofar as Commerce considers both countries in this table to be

economically comparable to Vietnam, the record suggests that

choosing one country to value labor may introduce either

overstated or understated labor rates.   Commerce obliquely

acknowledges this fact when it fails to address AHSTAC’s

contention that wage rate variability is correlated to GNI

variability.   Commerce notes in the I & D Mem. that

     [t]he Department has long recognized, and the
     Petitioners also agree, that the disparity in labor
     rates correspond with disparities in the GNIs of
     countries. The Petitioners’ labor data does not
     demonstrate that the Bangladeshi labor data is
     aberrationally low, but speak to the Petitioners’
     argument that the Department’s wage rate policy
     establishes a practice whereby labor wage rates will be
     understated when the surrogate country has a low GNI
     and overstated when the GNI is high.

I & D Mem. cmt. 2.I at 24.

          Commerce has acknowledged both the correlation of wage

rates to GNI and AHSTAC’s concerns about the resulting

possibility for outlying labor values in this review, yet

Commerce did not address the disparity in the GNI of potential

surrogate countries on the record of this case.   The Philippines

has a GNI roughly twice that of Vietnam, and Bangladesh has a GNI

roughly half that of Vietnam.   Furthermore, this disparity in GNI

is reflected in a disparity between the wage rates of the two
Consol. Court No. 11-00399                                   Page 23

countries.

             Commerce’s conclusion that Bangladesh’s wage rate is

the best available information for valuing the wage rate in

Vietnam must be based on a reasonable reading of the entire

record.13    By accounting for neither its prior finding of a

correlation between wage rates and GNI nor the disparity in both

wage rates and GNIs of the proposed surrogate countries on the

record of this case, Commerce has not considered evidence that

fairly detracts from the weight of its conclusion. Universal

Camera, 340 U.S. at 488.

             Therefore, Commerce’s use of Bangladeshi data to value

labor is not supported by substantial evidence.    Commerce may

change its averaging methodology, but it must make data choices

that a reasonable mind could find to be the best available on the

record.     In light of its prior findings regarding the exceptional

nature of the labor factor of production, Commerce should

reconsider what factors are important when valuing labor in this


     13
       Commerce argues that the Bangladeshi data is the best
available information for valuing labor because Commerce has a
policy that favors valuing all factors of production using a
single surrogate country. Commerce has previously found,
however, that labor should be treated differently for the reasons
discussed above. Without addressing these prior findings and the
apparent discrepancy in labor values on the record of this case,
Commerce’s policy of preferring a single surrogate country does
not satisfy the substantial evidence test.
          At oral argument, counsel for the Government offered
alternative bases for choosing Bangladesh, including its relative
proximity in GNI to Vietnam; however, counsel’s arguments were
not made by Commerce on the record of this case.
Consol. Court No. 11-00399                                       Page 24

review.   For the foregoing reasons, Commerce’s decision to value

labor only on the basis of data from Bangladesh will be remanded

for reconsideration or further explanation.



                                CONCLUSION

            Consistent with the foregoing opinion, the Final

Results are affirmed, in part, and remanded, in part.         Commerce’s

explanation for its continued use of zeroing in administrative

reviews is affirmed.   Commerce’s decision to value labor solely

on the basis of data from Bangladesh is remanded.        On remand,

Commerce must either reconsider whether, on the facts presented

here, it is reasonable to value labor using only data from the

primary surrogate country or provide further explanation for its

decision.   In either case, Commerce’s decision must be supported

by substantial evidence on the record.

            Commerce shall have until January 14, 2013, to complete

and file its remand redetermination.         Plaintiffs and Defendant-

Intervenors shall have until January 28, 2013, to file comments.

Plaintiffs, Defendant, and Defendant-Intervenors shall have until

February 11, 2013, to file any reply.

            It is SO ORDERED.


                                            /s/ Donald C. Pogue
                                         Donald C. Pogue, Chief Judge

Dated: November 15, 2012
     New York, New York
