Rubber Bands from Thailand

A-549-835 Investigation Public Document E&C AD/CVD OIII: LRL/SB

February 28, 2019

MEMORANDUM TO: Gary Taverman Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance

FROM: James Maeder Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations performing the duties of Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations

SUBJECT: Issues and Decision Memorandum for Final Affirmative Determination in the Antidumping Duty Investigation of Rubber Bands from Thailand

I. SUMMARY

The Department of Commerce (Commerce) determines that rubber bands from Thailand are being, or is likely to be, sold in the United States at less than fair value (LTFV), as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The period of investigation (POI) is January 1, 2017, through December 31, 2017.

Below is the complete list of the issues in this investigation for which we received comments from interested parties:

Comment 1: Adverse Facts Available for Liang Hah Heng Comment 2: Collapsing of Liang Hah Heng and Hah Shung Heng Comment 3: Date of Sale for Liang Hah Heng Comment 4: Liang Hah Heng’s Packing Costs Allocation Comment 5: Liang Hah Heng’s Reported Costs Comment 6: General and Administrative (G&A) Expenses for Liang Hah Heng Comment 7: Commerce’s Application of Quarterly Cost Methodology to U. Yong Comment 8: Rubber Band Variance Allocation for U. Yong Comment 9: Monthly Adjustment to Standard Costs for U. Yong Comment 10: Appropriate Control Number for Rubber Bands of Mixed Sizes for U. Yong Comment 11: U. Yong’s U.S. Indirect Selling Expenses

II. BACKGROUND

The two mandatory respondents in this investigation are: U. Yong Industry Co., Ltd. (U. Yong) and Liang Hah Heng International Rubber Co., Ltd. (Liang Hah Heng) and Hah Shung Heng Co. (Hah Shung Heng) (collectively, Liang Hah Heng).

On September 6, 2018, we published the Preliminary Determination of sales at LTFV of rubber bands from Thailand.1

During September 2018, we conducted verification of the sales and cost of production (COP) data reported by U. Yong and Liang Hah Heng, in accordance with section 782(i) of the Act.2 We invited parties to comment on the Preliminary Determination. Alliance Rubber Company (the petitioner), U. Yong and Liang Hah Heng submitted case and rebuttal briefs during November 2018.3

Commerce exercised its discretion to toll all deadlines affected by the partial federal government closure from December 22, 2018, through the resumption of operations on January 29, 2019.4 If the new deadline falls on a non-business day, in accordance with Commerce’s practice, the

1 See Rubber Bands from Thailand: Preliminary Affirmative Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Extension of Provisional Measures, 83 FR 45220 (September 6, 2018) (Preliminary Determination) and accompanying memorandum, “Decision Memorandum for the Preliminary Determination in the Less-Than-Fair-Value Investigation of Rubber Bands from Thailand,” (Preliminary Decision Memorandum). 2 See memoranda to the file, “Antidumping Duty Investigation of Rubber Bands from Thailand: Export Price, Home Market and Third-Country Sales Verifications of U. Yong Industry Co., Ltd.,” dated November 14, 2018 (U. Yong’s Sales Verification Report); “Antidumping Duty Investigation of Rubber Bands from Thailand: Sales Verifications of Liang Hah Heng International Rubber Co., Ltd. and Hah Shung Heng Co.,” dated November 5, 2018 (Liang Hah Heng’s Sales Verification Report); “Verification of the Cost Response of LHH in the Antidumping Duty Investigation of Rubber Bands from Thailand,” dated November 1, 2018 (Liang Hah Heng’s Cost Verification Report); and “Verification of U. Yong Industry Co., Ltd. in the Antidumping Duty Investigation of Rubber Bands from Thailand,” dated November 6, 2018 (U. Yong’s Cost Verification Report). 3 See the petitioner’s letter, “Rubber Bands from Thailand – Petitioner’s Case Brief for Respondent U. Yong,” dated November 21, 2018 (Petitioner’s Case Brief on U. Yong); the petitioner’s letter, “Rubber Bands from Thailand – Petitioner’s Case Brief for Respondent Liang Hah Heng International Rubber Co. Ltd.,” dated November 21, 2018 (Petitioner’s Case Brief on Liang Hah Heng); U. Yong’s letter, “Rubber Bands from Thailand,” dated November 21, 2017 (dated November 21, 2017 but submitted on November 21, 2018) (U. Yong’s Case Brief); Liang Hah Heng’s letter, “Rubber Bands from Thailand – Case Brief,” dated November 21, 2018 (Liang Hah Heng’s Case Brief); the petitioner’s letter, “Rubber Bands from Thailand – Petitioner’s Rebuttal Case Brief in Response to Case Brief of Respondent U. Yong Industry Co. Ltd.,” dated November 28, 2018 (Petitioner’s Rebuttal Brief on U. Yong); the petitioner’s letter, “Rubber Bands from Thailand – Petitioner’s Rebuttal Case Brief in Response to Case Brief of Respondent Liang Hah Heng International Rubber Co.,” dated November 28, 2018 (Petitioner’s Rebuttal Brief on Liang Hah Heng); U. Yong’s letter, “Rubber Bands from Thailand,” dated November 28, 2018 (U. Yong’s Rebuttal Brief); and, Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Rebuttal Brief,” dated November 28, 2018 (Liang Hah Heng’s Rebuttal Brief). 4 See memorandum to the Record from Gary Taverman, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance, “Deadlines Affected by the Partial Shutdown of the Federal Government,” dated January 28, 2019. All deadlines in this segment of the proceeding have been extended by 40 days.

deadline will become the next business day. The revised deadline for the final determination in this investigation is February 28, 2019.

III. SCOPE OF THE INVESTIGATION

The products covered by this investigation are rubber bands from Thailand. Commerce addressed all scope comments received in the Final Scope Decision Memorandum.5 For a complete description of the scope of this investigation, which is unchanged since the Preliminary Determination, see Appendix I of the accompanying Federal Register notice.

IV. CHANGES SINCE THE PRELIMINARY DETERMINATION

Based on our analysis of the comments received from parties, and minor corrections presented at verification,6 we made certain changes to the margin calculations since the Preliminary Determination7 for U. Yong and Liang Hah Heng. Specifically, we made the following changes:

5 See Memorandum, “Rubber Bands from the People’s Republic of China and Thailand: Scope Decision Memorandum for the Final Antidumping Duty and Countervailing Duty Determinations,” dated November 13, 2018 (Final Scope Decision Memorandum). 6 See U. Yong’s letter, “Rubber Bands from Thailand: AD Sales Verification Minor Corrections,” dated September 20, 2018 (U. Yong’s Sales Minor Corrections) and U. Yong’s letter, “Rubber Bands from Thailand: AD Cost Verification Minor Corrections,” dated September 12, 2018 (U. Yong’s Cost Minor Corrections); See also Liang Hah Heng’s letter, “Rubber Bands from Thailand – Sales Verification Minor Correction,” dated September 24, 2018 (Liang Hah Heng’s Sales Minor Corrections) and Liang Hah Heng’s letter, “Rubber Bands from Thailand – Cost Verification Minor Correction,” dated September 19, 2018 (Liang Hah Heng’s Cost Minor Corrections). 7 See Preliminary Determination and accompanying Preliminary Decision Memorandum. See also Memorandum, “Analysis Memorandum for the Preliminary Determination of the Less Than Fair Value Investigation of Rubber Bands from Thailand: U. Yong Industry Co., Ltd.,” dated August 29, 2018 (U. Yong’s Preliminary Analysis Memorandum); Memorandum, “Analysis Memorandum for the Preliminary Determination of the Less Than Fair Value Investigation of Rubber Bands from Thailand: Liang Hah Heng International Rubber Co., Ltd. (Liang Hah Heng) and Hah Shung Heng Co. (Hah Shung Heng),” dated August 29, 2018 (Liang Hah Heng’s Preliminary Analysis Memorandum); Memorandum, “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination – U. Yong Industry Co., Ltd.,” dated August 29, 2018 (U. Yong’s Preliminary Cost Memorandum); Memorandum, “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination,” dated August 29, 2018 (Liang Hah Heng’s Preliminary Cost Memorandum). See also Memorandum, “Analysis Memorandum for the Final Determination of the Less Than Fair Value Investigation of Rubber Bands from Thailand: U. Yong” dated concurrently with this memorandum (U. Yong’s Final Analysis Memorandum); Memorandum, “Cost of Production and Constructed Value Calculation Adjustments for the Final Determination in the Antidumping Duty Investigation of Rubber Bands from Thailand: U. Yong Industry Co., Ltd. (U. Yong),” dated concurrently with this memorandum (U. Yong’s Final Cost Calculation Memorandum); Memorandum, “Analysis Memorandum for the Final Determination of the Antidumping Duty Investigation of Rubber Bands from Thailand: Liang Hah Heng International Rubber Co., Ltd. (Liang Hah Heng) and Hah Shung Heng Co. (Hah Shung Heng),” dated concurrently with this memorandum (Liang Hah Heng’s Final Analysis Memorandum); and, Memorandum, “Antidumping Duty Investigation of Rubber Bands from Thailand: Cost of Production and Constructed Value Calculation Adjustments for the Final Determination,” dated concurrently with this memorandum (Liang Hah Heng’s Final Cost Calculation Memorandum).

A. Liang Hah Heng

1. We adjusted Liang Hah Heng’s reported labor expense, which included an adjustment to certain products based on differences in thickness and width.8

B. U. Yong

1. We revised the weighted-average costs for the two control numbers (CONNUMs) to exclude non-scope products.9

2. We adjusted the denominator of U. Yong’s G&A ratio.10

3. We revised the denominator of U. Yong’s indirect selling expense ratio to exclude non-subject merchandise sales based on findings at verification.11

V. DISCUSSION OF THE ISSUES

Comment 1: Adverse Facts Available for Liang Hah Heng

Petitioner’s Comments • Liang Hah Heng failed to act to the best of its ability in responding to Commerce’s requests for information. Specifically, Liang Hah Heng failed to: (1) provide accurate sales reporting by basing its date of sale on the invoice date rather than the purchase order date; (2) accurately report packing costs; and (3) allocate material and labor costs accurately.12 • These errors are not minor, taken in their totality, because small manipulations of comparison market data can have a major impact on the margin analysis by changing the availability of certain sales as potential matches for a large number of U.S. transactions.13 • Sections 776(a)(1) and 776(a)(2)(A)-(D) of the Act provide that if necessary information is not available on the record or if an interested party: (A) withholds information that has been requested by Commerce; (B) fails to provide such information in a timely manner or in the form or manner requested subject to section 782(c)(1) and (e) of the Act; (C) significantly impedes a proceeding under the antidumping statute; or (D) provides such information but the information cannot be verified as provided for in section 782(i) of the Act, Commerce shall, subject to subsection 782(d) of the Act, use facts otherwise available in reaching the applicable determination.14 Once Commerce determines that facts available

8 See Liang Hah Heng’s Final Cost Calculation Memorandum. See also Liang Hah Heng’s Final Analysis Memorandum. 9 See U. Yong’s Final Cost Calculation Memorandum. See also U. Yong’s Final Analysis Memorandum. 10 Id. 11 See U. Yong’s Final Analysis Memorandum at Attachment 5. 12 See Petitioner’s Case Brief on Liang Hah Heng at 2-3. 13 Id. at 3-4. 14 Id. at 2, citing to section 776(b)(1)(A) of the Act.

are warranted, section 776(b) of the Act permits it to apply an “adverse inference” if Commerce makes an additional finding that a party has not acted to best of its ability.15 • Commerce recognizes that pervasive mis-reporting of data is grounds for adverse facts available (AFA).16 AFA is required when “inaccuracies affect a substantial portion of…home market and U.S. sales listings, such that these sales listings no longer form a reliable basis on which to calculate a dumping margin…”17 Further, AFA is applicable where, as in this proceeding, the respondent did not “put forth its maximum effort” to provide accurate and comprehensive information.18 • Commerce should rely on the highest margin alleged in the petition based on the mis- reporting.

Liang Hah Heng’s Rebuttal Comments • Liang Hah Heng argues that no factual or legal basis exists to apply total or partial AFA to Liang Hah Heng in this investigation.19 • The antidumping statute provides that Commerce shall not decline to consider submitted information if the information is submitted by the established deadline; the information can be verified; the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; the interested party has demonstrated that it acted to the best of its ability; and the information can be used without undue difficulties.20 o Where Commerce determines that a response to a request for information is not compliant, Commerce is required to follow the notice and remedial requirements of section 782(d) of the Act, and Commerce must inform the party submitting the response of the nature of the deficiency and provide that party an opportunity to remedy the deficiency. o Liang Hah Heng fully cooperated with Commerce throughout the investigation by submitting all responses to questionnaires in a timely and accurate manner and throughout the two-week verification of cost and sales data.21 Liang Hah Heng acted to the best of its ability by responding to all requests for information.22 o Commerce’s authority to make adverse inferences is limited so that Commerce may not rely on adverse facts available where a respondent’s inability to provide particular information is due to the fact that the information is not maintained or does not

15 Id. at 3, citing to section 776(b) of the Act and Fujian Machinery and Equipment Imp. & Exp. Corp. v. U.S., 178 F. Supp. 2d 1305, 1332 (CIT 2001). 16 Id. at 3. 17 Id. at 3, citing to Certain Carbon and Alloy Steel Cut-To-Length Plate from Belgium: Final Determination of Sales at Less Than Fair Value and Final Determination of Critical Circumstances, in Part, 82 FR 16378 (April 4, 2017) (CTL Plate from Belgium) and accompanying Issues and Decision Memorandum at Comment 9. 18 Id. at 5, citing to Deosen Biochemical Ltd. v. U.S., 307 F. Supp. 3d 1364, 1369 (CIT 2018). 19 See Liang Hah Heng’s Rebuttal Brief at 2. 20 Id. at 3, citing to section 776 of the Act. 21 Id. at 3, citing to Liang Hah Heng’s Sales Verification Report; also citing to Liang Hah Heng’s Cost Verification Report. 22 Id. at 3-4, citing to section 776(b) of the Act.

exist.23 Since Liang Hah Heng has not withheld requested information, there is no basis to resort to facts available or AFA.24

Commerce’s Position: We agree with Liang Hah Heng that there is no basis for the determination of its margin on adverse facts available. Liang Hah Heng cooperated fully with all aspects of the investigation. It provided timely and complete questionnaire responses.25 It provided timely responses to all Commerce supplemental questionnaires.26 Commerce conducted verification and found no significant discrepancies with the information provided in its questionnaire responses.27 Moreover, the petitioner’s allegation failed to identify any basis that would require Commerce to reject the information provided by Liang Hah Heng and to determine the margin on the basis of AFA.

Specifically, Liang Hah Heng reported its U.S. and third-country (TC) sales based on the invoice date in accordance with 19 CFR 351.401(i) and instructions in Commerce’s questionnaire,28 and our verification did not identify any discrepancies with respect to Liang Hah Heng’s reported date of sale.29 Further, as explained in detail at Comment 3 below, because the record and our findings at verification indicate that Liang Ha Heng properly reported invoice date as the date of sale, there is no basis to reevaluate our comparison market determination and thus no need to evaluate whether some adjustment is needed to account for the use of a different comparison market.

Similarly, as explained in detail at Comment 4 below, the record and our findings at verification indicate that Liang Ha Heng properly reported its U.S. and TC packing expenses. Therefore, there is no basis for making adverse inferences with respect to Liang Hah Heng’s packing expenses.

Liang Hah Heng reported labor costs on a product-specific basis for each CONNUM based on specific throughput rates30 which, as we explain in Comment 5 below, we find reasonable. Therefore, there is no basis for making adverse inferences with respect to Liang Hah Heng’s labor costs. Therefore, for the final determination, we will continue to base Liang Hah Heng’s margins on the information provided in its questionnaire response, as adjusted by findings at verification, as applicable.

23 See Liang Hah Heng’s Rebuttal Brief at 4, citing to Olympic Adhesives, Inc. v. United States, 899 F.2d. 1565 (Fed. Cir. 1990). 24 Id. at 4, citing to section 776(a) of the Act; also citing to section 776(b) of the Act. 25 See the Preliminary Decision Memorandum at 3, enumerating each of Liang Hah Heng’s responses. 26 Id. 27 See Liang Hah Heng’s Sales Verification Report, and, Liang Hah Heng’s Cost Verification Report. 28 See Commerce’s letters to Liang Hah Heng and U. Yong, “Request for Information: Antidumping Duty Investigation: Thailand: Rubber Bands,” each dated April 12, 2018 (Initial AD Questionnaire) at Appendix I, page I-5, and pages B-11, B-12, and C-10. See also our discussion in Comment 3 of this memorandum. 29 See, e.g., Liang Hah Heng’s Sales Verification Report at 18 and Verification Exhibit LHH-12. See also Comment 4 of this memorandum. 30 See, Liang Hah Heng’s Cost Verification Report at 13.

Comment 2: Collapsing of Liang Hah Heng and Hah Shung Heng

Liang Hah Heng’s Comments • Commerce should treat Liang Hah Heng and Hah Shung Heng as separate entities in the final determination because 19 CFR 351.401(f)(1) sets a high bar for collapsing, which was not met in this case. • Commerce collapses affiliated entities: (1) where production facilities for similar products would not require substantial retooling to restructure manufacturing priorities and where there is significant potential for manipulation of price or production;31 or, (2) where there is a significant potential for the manipulation of price or production.32 • Commerce considers both actual manipulation in the past and possibility of future manipulation,33 so that the mere possibility that manipulation might occur between companies is insufficient justification by Commerce to collapse two entities.34 • In determining whether a significant potential for manipulation exists, Commerce considers the three factors listed in section 351.401(f)(2) of Commerce’s regulations in light of the totality of the circumstances where no one factor is dispositive in determining whether to collapse producers.35 Additionally, Commerce looks for “relatively unusual situations, where the type and degree of relationship is so significant that {it} finds that there is a strong possibility of price manipulation.”36 • The level of common ownership does not warrant collapsing because: o The two companies function independently and are divided between two sets of siblings. The siblings that run Hah Shung Heng are not involved in the decision- making or board meetings at Liang Hah Heng.37 The non-involved owners do not receive any of the benefits of ownership.38 o The majority living shareholder for Liang Hah Heng and Hah Shung Heng has no actual role within either company because that shareholder is elderly and infirm.39 o Hah Shung Heng has not changed its shareholding list recently.40

31 See Liang Hah Heng’s Case Brief at 2, citing 19 CFR 351.401(f)(1). 32 Id., citing 19 CFR 351.401(f)(2). 33 See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27346 (May 19, 1997) (Preamble). 34 See Hontex Enterprises, Inc. v. U.S., 27 C.I.T. 272, 299 (CIT 2003) (Hontex Enterprises). 35 See Koyo Seiko Co., Ltd. v. United States, 516 F. Supp. 2d 1323, 1346 (CIT 2007) (Koyo Seiko). 36 See Liang Hah Heng Case Brief at 3, citing to Koyo Seiko, 516 F. Supp. 2d at 1346, citing to Nihon Cement Co. v. United States, 17 C.I.T. 400, 426 (CIT 1993) (Nihon Cement), (quoting Final Determination of Sales at Less than Fair Value: Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany, 54 FR 18992, 19089 (May 3, 1989) (Antifriction Bearings). 37 See Liang Hah Heng’s Case Brief at 5, citing to Liang Hah Heng’s Sales Verification Report at 3-4; Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Supplemental Sections ABC Questionnaire Response,” dated June 27, 2018 (Liang Hah Heng’s 2nd Supplemental Response) at 3-5; Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Supplemental Section A Questionnaire Response,” dated June 6, 2018 (Liang Hah Heng’s SAQR) at page A-10 of Exhibit 1. 38 Id. 39 Id. at 5, citing to Liang Hah Heng’s 2nd Supplemental Response at 4. 40 Id. at 5, citing to Liang Hah Heng’s AQR at page A-9; Liang Hah Heng’s SAQR at Exhibit A-7 of Exhibit 1; Liang Hah Heng’s 2nd Supplemental Response at 4.

o Commerce has determined that estrangement among family members is a relevant determining factor.41 In Steel Threaded Rod from India, Commerce determined that two companies who produced and exported the subject merchandise were affiliated based on family relationships, but should not be collapsed based on the common ownership between the two entities.42 Although Liang Hah Heng and Hah Shung Heng both produce subject merchandise, and are owned by family members, like the companies in Steel Threaded Rod from India, both companies function independently because of estrangement and should not be collapsed.43 • While Commerce identified common board members,44 inactive common board members and lack of overlapping management in the companies further supports that the two companies should not be collapsed. o The companies do not share any sales information, facilities, or employees, and there are no transactions between companies.45 Commerce verified Liang Hah Heng’s and Hah Shung Heng’s responses regarding affiliation and board membership and found no discrepancies.46 o The U.S. Court of International Trade has found that companies wholly owned by a parent company and with overlapping boards of directors may not be sufficient evidence to support collapsing two companies.47 In FAG Kugelfischer Georg Schafer, two affiliated entities were not collapsed because the Court stated that the record did not support a collapsing decision by Commerce because there was not a strong possibility for price manipulation.48 • It is Commerce’s practice to treat entities as separate companies when the affiliated companies’ operations are not intertwined.49 Specifically: o In Steel Threaded Rod from India, Commerce did not collapse two affiliated companies because the companies were run independently and had no intertwined operations.50

41 Id. at 6. 42 Id. at 6, citing to Steel Threaded Rod from India: Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances, in Part; 2012–2013, 79 FR 40714 (July 14, 2014) (Steel Threaded Rod), and accompanying Issues and Decision Memorandum. 43 Id. at 7, citing to Liang Hah Heng’s 2nd Supplemental Response at 3-4. 44 Id. at 7, citing to memorandum to the file, “Affiliation and Collapsing Memorandum Regarding Liang Hah Heng International Rubber Co., Ltd. and Hah Shung Heng Co.,” dated July 20, 2018 (Liang Hah Heng Affiliation and Collapsing Memorandum) at 9. 45 Id. at 8, citing to Liang Hah Heng’s AQR at pages A-9 and A-10. 46 Id. at 8, citing to Liang Hah Heng’s Sales Verification Report at 4. 47 Id. at 8, citing to FAG Kugelfischer Georg Schafer KGaA v. United States, 932 F. Supp 315 (CIT 1996) (FAG Kugelfischer Georg Schafer); also citing to Nihon Cement Co., Ltd. v. U.S., 17 C.I.T. 400, 402 (CIT 1993). 48 Id. 49 Id. at 9, citing to: Steel Threaded Rod from India and accompanying Issues and Decision Memorandum; and, Notice of Final Determination of Sales at Less Than Fair Value and Final Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the Republic of Korea, 71 FR 29310 (May 22, 2006) (Diamond Sawblades from Korea), and accompanying Issues and Decision Memorandum. 50 Id. at 9.

o In Diamond Sawblades from Korea, Commerce did not collapse two affiliated companies because their operations were not intertwined even though they had common ownership.51

Petitioner’s Rebuttal Comments • Given that Liang Hah Heng and Hah Shung Heng are affiliated and both produce subject merchandise, the existence of overlapping directors is of key relevance and cannot be overlooked because the family members are estranged. • Commerce considers three factors when determining whether there is ‘significant potential for manipulation:’ “(1) the level of common ownership, (2) to what extent managerial employees or board members of one firm sit on the board of directors of an affiliated firm, and (3) whether the operations are intertwined through shared sales information, production and pricing decision-making, or significant transactions” and that “these factors are considered by Commerce in light of the totality of the circumstances; no one factor is dispositive in determining whether to collapse the producers.”52 The petitioner claims: o Liang Hah Heng and Hah Shung Heng are owned by the same family so that “although ‘common family ownership alone provides an insufficient basis to collapse entities’ such ownership is a ‘positive indicator of the significant potential for manipulation.’”53 o Both Liang Hah Heng and Hah Shung Heng have facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities.54

51 Id., citing to Diamond Sawblades from Korea at Comment 13; also citing to Final Determination of Sales at Less than Fair Value: Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany, 54 FR 18992, 19089 (May 3, 1989) (Antifriction Bearings) (Commerce found that “the firms do not share marketing information or production decisions, nor is there an intertwined management structure,” and thus concluded that “there does not appear to be a substantial danger of price manipulation as a result of the relationship of NSK with the two related firms.”) 52 See Petitioner’s Rebuttal Brief on Liang Hah Heng at 3, citing to Koyo Seiko Co., Ltd. v. United States, 516 F. Supp. 2d 1323, 1346 (CIT 2007) (Koyo Seiko) citing to section 351.401(f) of Commerce’s regulations. 53 See Petitioner’s Rebuttal Brief on Liang Hah Heng at 2, citing to Zhaoqing New Zhongya Aluminum Co. v. United States, 70 F.Supp.3d 1298, at 1304-05 (CIT 2015); also citing to Catfish Farmers of Am. v. United States, 641 F. Supp. 2d 1362, 1371 (CIT 2009) (Catfish Farmers) (“the existence of the family group, and the significant controlling ownership by the family members, reasonably supports Commerce’s collapsing decision;” despite the absence of overlapping board members, the evidence “clearly show{ed} that the family ha{d} the ability and financial incentive to coordinate their actions to direct…{the companies}… to act in concert with each other”); also citing to Statement of Administrative Action Accompanying the Uruguay Round Agreements Act, (SAA), H.R. Doc. 103-316 vol 1 (1994) at 838 (“A company may be in a position to exercise restraint or direction…through corporate or family groupings”); also citing to Catfish Farmers 641 F. Supp. 2d at 1372 (“Commerce reasonably applied the control analysis to the family group level because the companies are owned and controlled by family members. Accordingly, although Thuan Hung does not share board members with other QVD companies, the presence of members of the QVD family group in senior leadership positions in all of the QVD companies supports a finding that there is a significant potential for manipulation”). 54 Id. at 3, citing to Liang Hah Heng Affiliation and Collapsing Memorandum at 8.

o Overlapping family members serve on the boards of directors of the two entities so that Liang Hah Heng’s fact pattern is not similar to the one in Steel Threaded Rod because, where there were no common board members.55 o Liang Hah Heng inappropriately stated that the operations of Liang Hah Heng and Hah Shung Heng are not “intertwined.”56 In the preliminary determination, Commerce appropriately determined that collapsing can occur without evidence of intertwined operations because Commerce considers the totality of the circumstances.57 The petitioner emphasizes that the totality of circumstances includes common ownership and overlapping family board members. • Liang Hah Heng’s citation to FAG Kugelfischer Georg Schafer is not appropriate. FAG Kugelfischer Georg Schafer involved a large international conglomerate rather than a family-owned business. The court was critical of Commerce having “only considered two of the {collapsing} factors listed in Nihon - whether the companies were intertwined and the possibility of manipulation. There is no evidence that Commerce determined either that transactions occurred between the companies or that the companies had similar production equipment.”58 The petitioner argues that, unlike FAG Kugelfischer Georg Schafer, Commerce has considered all of the relevant factors in this case and found that both companies produce subject merchandise.59 • Liang Hah Heng’s reference to Hontex Enterprises, is not applicable because Hontex Enterprises did not involve a single family with individual family members serving on both boards of directors.60

Commerce’s Position: Section 771(33)(A) of the Act defines affiliated persons as, “{m}embers of a family, including brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants.” We examined this issue prior to the Preliminary Determination, and determined that there is a significant potential for the manipulation of price or production because of the companies’ common ownership by members of a single family grouping and by the extent to which members of the family grouping serve as board members of both companies.61 After the Preliminary Determination, we verified the information provided in the questionnaire responses regarding the facts pertaining to the two companies’ ownership, specifically finding that the two entities are commonly owned by members of the family grouping and members of the family

55 Id. at 3, citing to Steel Threaded Rod and accompanying Issues and Decision Memorandum at 7 (“We also note that no individual managerial employees or board members of Mangal are managers or directors of Corona, and vice versa”). 56 Id. at 6, citing to Liang Hah Heng’s Case Brief at 9-10. 57 Id. at 6, citing to Liang Hah Heng Affiliation and Collapsing Memorandum at 9. 58 Id. at 4, citing to FAG Kugelfischer Georg Schafer, 932 F. Supp at 324. 59 Id. at 5, citing to Liang Hah Heng Affiliation and Collapsing Memorandum at 8-9. 60 Id. at 5, citing to Hontex Enterprises, 27 C.I.T. at 299 (“At no point does the evidence demonstrate that Mr. Wei was in control of both Companies or that his activities served to allow one company or any third party to exercise control over the Companies. The evidence merely demonstrates that the Companies shared an employee and nothing more”); id. at n. 21 (“While it may be that the services Mr. Wei provided each company were ‘significant,’ Commerce nowhere explains how such activity, no matter how critical to each company’s crawfish tail meat export business, had the significant potential to impact the pricing or export decisions of either company”). 61 See Liang Hah Heng Affiliation and Collapsing Memorandum at 9.

grouping serve as board members of both companies.62 Though there is no information on the record that otherwise demonstrates that the operations of these two companies are intertwined through the sharing of sales information, involvement in production and pricing decisions, or significant transactions between the affiliated producers,63 we have consistently found that all of the factors in 19 CFR 351.401(f) need not be present for an affirmative collapsing determination.64 Thus, in consideration of the totality of the circumstances, we continue to find there is a significant potential for the manipulation of price or production as a result of the companies’ common ownership by members of the family grouping and by the extent to which members of the family grouping serve as board members of both companies.

Liang Hah Heng mistakenly contends that Commerce considers both actual manipulation in the past and the possibility of future manipulation. This argument does not reflect Commerce’s practice post-codification of 19 CFR 351.401(f). Section 351.401(f) of Commerce’s regulations expressly provides, in relevant part, that the “Secretary will treat two or more affiliated producers as a single entity where … the Secretary concludes that there is a significant potential for the manipulation of price or production.” The significant potential standard differs from the pre- codification standard of “possible manipulation.” In promulgating 19 CFR 351.401(f), Commerce considered that the Court of International Trade, in FAG Kugelfischer Georg Schafer, recognized that “this latter standard may require evidence of actual manipulation, whereas a standard based on the potential for manipulation focuses on what may transpire in the future.”65 Thus, we disagree that Commerce’s practice requires a finding of actual manipulation in the past.

We also disagree that Commerce’s collapsing determinations in Steel Threaded Rod from India, Diamond Sawblades from Korea, FAG Kugelfischer Georg Schafer, or Hontex are relevant to the affiliation and collapsing determination with respect to Liang Hah Heng and Hah Shung Heng. Specifically, in Steel Threaded Rod from India, Commerce concluded that, although two companies were held by a family grouping, there was no significant potential of manipulation because: (1) there were no overlapping individual managerial employees or board members; and, (2) there was no information on the record to indicate that the operations were intertwined.66 Further, record evidence indicated that the two parties at issue were competitors, with no business relationship whatsoever.67 Similarly, in Diamond Sawblades from Korea, Commerce found that the parties at issue “do not jointly employ or share any persons as managers, executives, or members of the board; nor is there any evidence on the record that there have been any shared individuals during the last 18 years.”68 The facts underlying both determinations are clearly inapposite. Unlike the fact patterns in Steel Threaded Rod from India and Diamond

62 See Liang Hah Heng’s Verification Report at 4. 63 See Liang Hah Heng Affiliation and Collapsing Memorandum at 9. 64 See Koyo Seiko at 516 F. Supp. 2d at 1346 (stating that “no one factor is dispositive in determining whether to collapse the producers”) and citing Light Walled Rectangular Pipe and Tube from Turkey: Notice of Final Determination of Sales at Less Than Fair Value, 69 FR 53675 (September 2, 2004) and accompanying Issues and Decision Memorandum Comment 10. 65 See Preamble, 62 FR at 27346. 66 See Steel Threaded Rod from India and accompanying Issues and Decision Memorandum at Comment 1. 67 Id. 68 See Diamond Sawblades from Korea and accompanying Issues and Decision Memorandum at Comment 13, page 52.

Sawblades from Korea, Liang Hah Heng and Hah Shung Heng have overlapping board members, and this fact is not in dispute.69

Liang Hah Heng’s reliance on FAG Kugelfischer Georg Schafer is also misplaced because in that case, the Court held that Commerce failed to address all three criteria for determining whether a significant potential for manipulation of price or production exists,70 whereas, in the instant investigation, Commerce addressed all of the required criteria.71 Liang Hah Heng’s reliance on Hontex is similarly misplaced. In Hontex, the Court took issue with Commerce’s affiliation and significant potential for manipulation findings, concluding that the “mere employment of the same person by both Companies, while providing some evidence that the Companies were intertwined, does not rise to the level of a web of control relationships that would be sufficient to support a collapsing determination.”72 Here, as Commerce explained, its finding of affiliation and significant potential for the manipulation of price or production, turns in part, on the companies’ common ownership by members of the family grouping and by the extent to which members of the family grouping serve as board members of both companies.73 As a consequence, Hontex is inapplicable to fact patterns with respect to Liang Hah Heng and Hah Shung Heng.

Given that, we continue to find a significant potential for the manipulation of price or production as a result of Liang Hah Heng’s and Hah Shung Heng’s common ownership by members of the same family grouping and by the extent to which members of the family grouping serve as board members of both companies; therefore, we continue to collapse these two companies for the final determination.

Comment 3: Date of Sale for Liang Hah Heng

Petitioner’s Comments • Incorrectly reporting the date of sale can impact the comparison market selection. Liang Hah Heng indicated that both its U.S. and TC sales were made pursuant to purchase orders.74 However, Liang Hah Heng reported invoice date as the date of sale for both markets,75 and based its determination of the appropriate comparison market on the quantities that were invoiced during the POI.76 Liang Hah Heng provided documentation

69 See, generally, Liang Hah Heng’s AQR and SAQR, and Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Supplemental Sections ABC Questionnaire Response,” dated June 27, 2018 (Liang Hah Heng’s 2nd SAQR (which includes Hah Shung Heng Section A response)). 70 See FAG Kugelfischer Georg Schafer at 932 F. Supp. at 324 and 325. 71 See Liang Hah Heng’s Affiliation and Collapsing Memorandum at 8 and 9. 72 See, e.g., Hontex, 248 F. Supp. 2d at 1346 (internal quotations omitted). 73 See Liang Hah Heng Affiliation and Collapsing Memorandum. 74 See Petitioner’s Case Brief on Liang Hah Heng at 4, citing to Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Section A Questionnaire Response,” dated May 10, 2018 (Liang Hah Heng’s AQR) at pages A-19 and A-20. 75 Id. at 5, citing to Liang Hah Heng’s AQR at page A-18, and Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Sections B, C, and D Questionnaire Response,” dated June 11, 2018 (Liang Hah Heng’s BQR) at page B-16, (Liang Hah Heng’s CQR) at page C-14, and (Liang Hah Heng’s DQR). 76 Id.

on the record for several sales showing that the purchase order was the correct date of sale.77 • Following verification, Commerce noted that Liang Hah Heng provided information for U.S. and third-country sales, showing changes in quantity between the purchase order and invoice date.78 The lack of discrepancies in the samples that Liang Hah Heng selected to support its preferred position on date of sale is not dispositive, particularly since a thorough examination of the record shows no support for Liang Hah Heng’s reporting of date of sale.79 • The purchase orders and invoices that Commerce examined at verification with respect to U.S. and TC sales do not support the selection of the invoice date as the date of sale for Liang Hah Heng.80 • Liang Hah Heng’s mis-reporting of date of sale should result in the application of total AFA because, inter alia, it may have shifted the comparison market analysis to an outcome more favorable to Liang Hah Heng. Therefore, if Commerce does not reject Liang Hah Heng’s response in its entirety and apply AFA, Commerce should apply an upward adjustment to normal value based on the percentage difference in unit values per kilogram between Canada and Thailand, the comparison market that Liang Hah Heng may have directed Commerce away from with flawed date-of-sale reporting.81

Liang Hah Heng’s Rebuttal Comments • Commerce should continue to use invoice date as date of sale for Liang Hah Heng.82 Liang Hah Heng demonstrated throughout the investigation and verification that the purchase order is the initial understanding between Liang Hah Heng and the customer and that the material terms of the sale are not agreed upon until the issuance of the invoice.83 Liang Hah Heng provided examples of transactions where material terms of sale changed between issuance of original purchase order and the invoice.84 • The use of the invoice date as the date of sale is consistent with Commerce’s regulations, which state that Commerce normally will use the date of invoice, unless a different date

77 Id. at 4-5, citing to Liang Hah Heng’s AQR at Exhibit A-7, “U.S. Sales Documentation,” and Exhibit A-9, “Canadian Market Sales Documentation.” 78 Id. at 5, citing to Liang Hah Heng’s Sales Verification Report at 8. 79 Id. at 5. 80 Id. at 5-7, citing to Liang Hah Heng’s Sales Verification Report at Exhibit LHH-5, Exhibits LHH-13 through LHH-17, and Verification Exhibit LHH-23 through LHH-27 for U.S. sales; and, Verification Exhibits LHH-18 through LHH-22 and LHH-28 through LHH-32 for TC sales. 81 Id. at 7, citing to Liang Hah Heng’s Sales Verification Report at Exhibit LHH-1, “Quantity and Value of Sales (LHH and HSH).”. 82 See Liang Hah Heng’s Rebuttal Brief at 4-5. 83 See Liang Hah Heng’s Rebuttal Brief at 4-5, citing to Liang Hah Heng’s AQR at A-20, see also Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Second Supplemental Sections ABC Response,” dated July 10, 2018 (Liang Hah Heng’s Second ABC Response) at Exhibit SBC-1 and SUPP ABC-3. 84 Id. at 5, citing to Liang Hah Heng’s Sales Verification Report at Exhibit LHH-5, LHH-18, and LHH-23.

better reflects the terms of sale.85 Antidumping regulations and case law establish the invoice date as the “presumptive” date of sale.86 • Commerce examined Liang Hah Heng’s dates of sale at verification by examining emails, purchase orders, and revised purchase orders with changes.87 Thus there is substantial evidence on the record that refutes the petitioner’s claims that evidence of transactions where the material terms of sale changed between the issuance of the original purchase order and the commercial invoice is lacking.88

Commerce’s Position: We agree with Liang Hah Heng that information on the record indicates that the material terms of sale changed between the issuance of the original purchase order and the commercial invoice, and that Liang Hah Heng appropriately reported its U.S. sales based on the records kept in the normal course of business, in accordance with 19 CFR 351.401(i) and the instructions in the Initial AD Questionnaire.

Section 351.401(i) of Commerce’s regulations states:

In identifying the date of sale of the subject merchandise or foreign like product, the Secretary normally will use the date of invoice, as recorded in the exporter or producer’s records kept in the ordinary course of business. However, the Secretary may use a date other than the date of invoice if the Secretary is satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale.89

The Initial AD Questionnaire defines the date of sale as follows:90

Because the Department attempts to compare sales made at the same time, establishing the date of sale is an important part of the dumping analysis. The Department will normally use the date of invoice, as recorded in the exporter or producer’s records kept in the ordinary course of business. However, the Department may use a date other than the date of invoice (e.g., the date of contract in the case of a long-term contract) if satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale (e.g., price, quantity). (Section 351.401(i) of the regulations.) If, for any specific sale, the date selected is

85 Id. at 5, citing to 19 CFR 351.401(i); Notice of Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil, 64 FR 38756, 38768 (July 19, 1999) (Hot- Rolled Steel from Brazil) (stating that Commerce “considers the date of sale to be the date on which all substantive terms of sale are agreed upon by the parties”). 86 Id. at 5, citing, e.g., Yieh Phui Enterprise Co. v. United States, 791 F. Supp. 2d 1319, 1322-24 (CIT 2011); Nucor Corp. v. United States, 612 F. Supp. 2d 1264, 1299 (CIT 2009); Harnos Electricos de Venezuela, SA. (HEVENSA) v. United States, 285 F. Supp. 2d 1353, 1367 (CIT 2003); SeAH Steel Corp. v. United States, 25 CIT 133, 135 (2001). 87 Id. at 5, citing to Liang Hah Heng’s Sales Verification Report at 8 and Exhibit LHH-5, at pages 1-15. 88 Id. at 6, citing to Liang Hah Heng’s Sales Verification Report at Exhibit LHH-18 and Exhibit LHH-5, at pages 16- 20. See also Verification Exhibit LHH-23. 89 See 19 CFR 351.401(i). 90 See Initial AD Questionnaire.

after the shipment date for that sale, the Department will use shipment date as the date of sale instead, but only for the sale in question.91

Liang Hah Heng reported its invoice date as the date of sale for its U.S. sales, and third-country sales.92 It provided a flow chart for its sales process.93 Liang Hah Heng demonstrated that the terms of sale can change between the date of the original purchase order and the invoice date.94 We tested Liang Hah Heng’s date of sale methodology at verification,95 examining copies of emails, purchase orders and revised purchase orders that indicated changes in quantity between the purchase order date and the invoice date for both U.S. and third-country sales.96 We found no errors or discrepancies between the information presented in the questionnaire response and in Liang Hah Heng’s primary source documents.97 Moreover, we agree that Liang Hah Heng adequately provided evidence on the record of transactions where the material terms of sale changed between the issuance of the original purchase order and the commercial invoice.98

We are aware that the petitioner has objected to Liang Hah Heng’s date of sale methodology throughout this investigation,99 claiming that Liang Hah Heng’s date of sale is “incorrect”100 because Liang Hah Heng makes sales pursuant to purchase orders whose terms of sale did not change prior to the invoice date.101 Although the petitioner’s case brief points to certain transactions where the material terms did not change between the original purchase order date and the invoice date,102 evidence on the record indicates that there were sales during the POI for which the material terms of sale changed in between the purchase order date and the date of invoice.103

91 Id. at Appendix I, page I-5. 92 See Liang Hah Heng’s AQR at page A-18 and SAQR AG page A-15; Liang Hah Heng’s BQR at page B-15 and CQR at page C-14. 93 Id. at Exhibit A-5, “Sales Channels and Sales Flow Chart.” 94 See Liang Hah Heng’s Sales Verification Report at Verification Exhibits LHH-5, “Date of Sale,” LHH-13, “U.S. Pre-Selected Sale #1,” LHH-19, “TC Pre-Selected Sale #2,” LHH-23, “U.S. Pre-Selected Sale #1.” 95 See Liang Hah Heng’s Sales Verification Report at 8. 96 Id. and Verification Exhibit LHH-5, “Date of Sale,” at pages 1-15 through I-20. See also Verification Exhibits LHH-13, LHH-19, and LHH-23. 97 Id. See, generally, Liang Hah Heng’s Sales Verification Report. 98 See, e.g., Liang Hah Heng’s Rebuttal Brief at 5-6. 99 See e.g., the petitioner’s letter, “Rubber Bands from Thailand: Petitioner’s Comments on Liang Hah Heng Responses to Sections A, B, C and D of the Antidumping Questionnaire,” dated June 22, 2018, at 3-4; the petitioner’s letter, “Rubber Bands from Thailand: Petitioner’s Pre-Preliminary Determination Comments Based on Data Submitted in the Questionnaire Responses of Respondent Liang Hah Heng International Rubber Co. Ltd.,” dated August 16, 2018 (Petitioner’s Pre-Preliminary Determination Comments on Liang Hah Heng), at 5; the petitioner’s letter, “Rubber Bands from Thailand: Petitioner’s Comments on Sales Verification for Respondent Liang Hah Heng International Rubber Co. Ltd.,” dated September 21, 2018 (Petitioner’s Sales Verification Comments on Liang Hah Heng), at 4; and, Petitioner’s Case Brief on Liang Hah Heng at 4-7. 100 Id. 101 See, specifically, Petitioner’s Case Brief on Liang Hah Heng at 4-7. 102 See, e.g., Petitioner’s Case Brief on Liang Hah Heng at 4-6, citing to: 1) Liang Hah Heng’s AQR at pages A-18 through A-20, and, Exhibits A-7 and A-9; and. 2) Liang Hah Heng’s Sales Verification Report 8, which in turn cites to Verification Exhibit LHH-5, “Date of Sale.” 103 See, e.g., Petitioner’s Case Brief on Liang Hah Heng at 5, citing to Liang Hah Heng Verification Exhibit LHH-5, “Date of Sale.” See also Liang Hah Heng’s Rebuttal Brief at 6 and Liang Hah Heng’s Sales Verification Report at 8 and Verification Exhibits LHH-13, LHH-19, and, LHH 23.

Specifically, the quantity reflected on the commercial invoice is not the same as the quantity reflected on the initial purchase order for either the U.S. or TC sale included in Verification Exhibit 5, “Date of Sale.”104 In addition, the record shows differences in the terms of sale between the original purchase order and the invoice for Verification Exhibits LHH-13, “U.S. Pre-Selected Sale #1,” LHH-19, “TC Pre-Selected Sale #2,” and LHH-23, “U.S. Surprise Sale #1.” We note further that although the terms of sale for the specific transaction at issue in Verification Exhibit LHH-23 did not change from purchase order date to invoice date, a close examination of Verification Exhibit LHH-23 reveals that the total quantity and total value reflected on the invoice as a whole were not the same as total quantity and total value reflected on the initial purchase order in that exhibit.105

Because the petitioner provides an extensive discussion of Liang Hah Heng’s TC sales, which is business-proprietary in its entirety, we analyze these sales in more detail in the business- proprietary version of Liang Hah Heng’s Final Analysis Memorandum.106 However, we find based on our review, that the record shows that Liang Hah Heng and its customers changed the material terms of sale as needed,107 and that Liang Hah Heng appropriately reported the date of sale as instructed in the Initial AD Questionnaire which was verified and is consistent with our regulations.108

We note that the petitioner has provided no evidence for its claim that “the quantity and value of POI sales may differ significantly based on analysis of sales by purchase order or contract dates and thereby result in a different determination with regard to the correct comparison market,”109 and, as a consequence, “may have shifted the comparison market analysis to an outcome more favorable to LHH”(emphasis added).110 The statements in and of themselves are speculative and do not indicate in any way that Liang Hah Heng failed to provide the information requested in the Initial AD Questionnaire in accordance with 19 CFR 351.401(i). As Liang Hah Heng noted, the antidumping duty regulations and case law establish the invoice date as the “presumptive” date of sale.111 The Court of International Trade has found that, “an interested party proposing an alternate date of sale bears the burden of demonstrating that the material terms of the sale

104 See Liang Hah Heng Verification Exhibit LHH-5, “Date of Sale,” at page 19 in comparison with pages 2-3. 105 See Liang Hah Heng Sales Verification Report at Exhibit LHH-23. 106 See Liang Hah Heng’s Final Analysis Memorandum. 107 See, e.g., Liang Hah Heng Verification Exhibits LHH-5, LHH-18, and LHH-23. 108 See, generally, Liang Hah Heng Sales Verification Report which found no errors or omissions in Liang Hah Heng’s sales reporting. 109 See Petitioners’ Case Brief at 7. 110 Id. 111 See, e.g., Hot-Rolled Steel from Brazil. See also, Certain Plastic Decorative Ribbon from the People’s Republic of China: Final Determination of Sales at Less Than Fair Value, 84 FR 1055 (February 1, 2019), and accompanying Issues and Decision Memorandum at Comment 12 (stating that the invoice date is the default date in the regulations); Certain Hot-Rolled Steel Flat Products from the Republic of Korea: Final Determination of Sales at Less Than Fair Value, 81 FR 53419 (August 12, 2016) and accompanying Issues and Decision Memorandum at Comment 7 (citing Allied Tube and Conduit Corp. v. United States, 132 F. Supp. 2d 1087, 1090-1092 (CIT 2001) (“As elaborated by Department practice, a date other than invoice date ‘better reflects’ the date when ‘material terms of sale’ are established if the party shows that the ‘material terms of sale’ undergo no meaningful change (and are not subject to meaningful change) between the proposed date and the invoice date.”).

were ‘firmly’ and ‘finally’ established on the proposed date.”112 Thus, an interested party has the burden of overcoming the regulation’s presumptive selection of the invoice date as the proper date of sale.113 The Court has found that “{t}o successfully rebut Commerce’s presumptive selection of the invoice date, an interested party must also demonstrate “that a reasonable mind has one, and only one, date of sale choice.”114

It is our practice to base the date of sale on the date of invoice, unless a different date better reflects the terms of sale.115 Our verification demonstrated that Liang Hah Heng’s sales are subject to change between the original purchase order and invoice.116 Thus, for the final determination, we continue to base our margin calculations on the invoice date as date of sale for the U.S. and TC markets.

Comment 4: Liang Hah Heng’s Packing Costs Allocation

Petitioner’s Comments • Liang Hah Heng erroneously reported packing costs by dividing the “total value of packing materials used” by total quantity packed.117 o Specifically, Liang Hah Heng aggregated packing costs despite significant pricing differences in the types of packing.118 Products sold with more expensive packing forms will have higher prices.119 Since it is impossible to accurately reflect the products that were sold, Commerce must apply an adverse inference by setting packing costs for all comparison market sales to zero,120 and resetting the packing costs for U.S. sales to the reported amount plus an additional calculated amount taken from Verification Exhibit LHH-18, “TC Preselected Sale #1.”121

112 See, e.g., ArcelorMittal USA LLC v. United States, 302 F. Supp. 3d 1366, 1375-1376 (CIT 2018). 113 Id. at 1370. 114 Id., citing Tosçelik Profil Ve Sac End. A.Ş v. United States, 256 F. Supp. 3d 1260, 1263 (CIT 2017), which cites Preamble, 62 FR 27296, 27348-49. See also Allied Tube and Conduit Corp. v. United States, 127 F. Supp. 2d 207, 220 (CIT 2000) (which explains that “if the record indicates that Commerce’s decision to use the invoice date as the date of sale was reasonable and was supported by substantial evidence,” the plaintiff’s arguments must fail). 115 See Certain Plastic Decorative Ribbon from the People’s Republic of China: Final Determination of Sales at Less Than Fair Value, 84 FR 1055 (February 1, 2019) and accompanying Issues and Decision Memorandum at 28. (stating that the invoice date is the default date in the regulations). See also Notice of Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil, 64 FR 38756, 38768 (July 19, 1999) (stating that Commerce “considers the date of sale to be the date on which all substantive terms of sale are agreed upon by the parties”). 116 See Liang Hah Heng Sales Verification Report at 8, and Verification Exhibit LHH-5, LHH-18 and LHH-23. 117 See Petitioner’s Case Brief on Liang Hah Heng at 7, citing to Liang Hah Heng’s BQR at B-31 through B-32 and at Exhibit B-11; Liang Hah Heng’s CQR at Exhibit C-10; and, Liang Hah Heng’s Sales Verification Report at 19- 20. 118 Id. at 8-9. 119 Id. at 8. 120 Id. at 8. 121 Id. at 9.

Liang Hah Heng’s Rebuttal Comments • Commerce should decline to make any adjustment to Liang Hah Heng’s packing expenses for the final determination.122 • The petitioner accepted Liang Hah Heng’s packing cost methodology throughout the proceeding and raised the issue for the first time in its case brief.123 Specifically, the petitioner did not comment on Liang Hah Heng’s reported packing expenses in the Petitioner’s Pre-Preliminary Determination Comments on Liang Hah Heng,124 Petitioner’s Cost Verification Comments on Liang Hah Heng,125 or Petitioner’s Sales Verification Comments on Liang Hah Heng,126 despite that fact that Liang Hah Heng explained its packing methodology in its Section B and C responses127 (which explain that Liang Hah Heng calculated packing costs separately for sacks and cartons);128 and its Second ABC Response (which explains that Liang Hah Heng first calculated a cost per kilogram subtotal that reflects all POI costs for other packing materials, and then adding the main packing costs of either outer sacks or outer cartons).129 • Thus, because the petitioner raised the issue for the first time in its case brief, although it had an opportunity to file the allegation prior to the preliminary determination, it is too late for consideration for the final determination and too late for Commerce to request additional information.130 • The petitioner erroneously claims that an “analysis of price differentiation cannot be properly conducted in light of the incorrect packing costs,”131 since Commerce does not adjust U.S. prices for packing expenses when conducting its Cohen’s d test.132 Thus,

122 Liang Hah Heng’s Rebuttal Brief at 6-7. 123 Id. at 7. 124 Id. at 8, citing to Petitioner’s Pre-Preliminary Determination Comments on Liang Hah Heng. 125 Id. at 8, citing to petitioner’s letter, “Rubber Bands from Thailand – Petitioner’s Comments on the Cost Verification for Respondent Liang Hah Heng International Rubber Co. Ltd.,” dated September 14, 2018 (Petitioner’s Cost Verification Comments on Liang Hah Heng). 126 Id. at 8, citing to Petitioner’s Sales Verification Comments on Liang Hah Heng. 127 See Liang Hah Heng’s Rebuttal Brief at 7, citing to Liang Hah Heng’ BQR at B-31 and at Exhibit B-11. 128 Id. 129 Id. at 7, citing to Liang Hah Heng’s Second ABC Response at page SuppABC-12. 130 Id. at 7-8, citing to Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea: Final Results of Antidumping Duty Administrative Review; 2011–2012, 79 FR 17503 (March 28, 2014) and accompanying Issues and Decision Memorandum at Comment 1; Certain Oil Country Tubular Goods from the Republic of Turkey: Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances, in Part, 79 FR 41971 (July 18, 2014) and accompanying Issues and Decision Memorandum at Comment 4; Citric Acid and Certain Citrate Salts from the People’s Republic of China: Final Results of Countervailing Duty Administrative Review; 2011, 79 FR 108 (January 2, 2014) and accompanying Issues and Decision Memorandum at Comment 13A; Certain Cut-to-Length Carbon-Quality Steel Plate Products from the Republic of Korea: Final Results of Antidumping Duty Administrative Review; 2011–2012, 78 FR 29113 (May 17, 2013) and accompanying Issues and Decision Memorandum at “Targeted Dumping Allegation;” Notice of Final Results of Antidumping Duty Administrative Reviews and Determination Not To Revoke in Part: Certain Corrosion-Resistant Carbon Steel Flat Products and Cut-to-Length Carbon Steel Plate from Canada, 66 FR 3543 (January 16, 2001) and accompanying Issues and Decision Memorandum at Comment 1; Certain Pasta from Italy: Final Results of Antidumping Duty Administrative Review; 2015–2016, 82 FR 57428 (December 5, 2017) and accompanying Issues and Decision Memorandum at Comment 2. 131 Id. at 10, citing to Petitioner’s Case Brief on Liang Hah Heng at 9. 132 Id. at 10.

Commerce should disregard the petitioner’s argument regarding packing expenses and differential pricing.133 • Commerce applied the average-to-average method for all U.S. sales to calculate the weighted-average dumping margin.134 Commerce not only calculated weighted-average U.S. selling prices, but also U.S. packing expenses that Commerce subsequently added to normal values for comparison purposes.135 As a result, any differences in packing expenses on a sale-by-sale basis would be diminished because Commerce calculated weighted- average packing expenses.136 • The petitioner based its allegation on one example from Verification Exhibit LHH-18 and presented no record evidence or calculations showing that total costs per carton or total costs per kilogram differ significantly based on different packing materials.137 Liang Hah Heng also argues that the petitioner ignores that Liang Hah Heng differentiated its packing costs based on whether its packing costs were sold in sacks or cartons138 and that the selection of sacks or cartons represent the most significant packing cost difference.139 • If the petitioner would have commented on Liang Hah Heng’s reported packing data previously, Liang Hah Heng could have further explained why a packing expense methodology on a sale-by-sale approach would have been impractical and would have not resulted in a more accurate margin.140 Packing expenses are based on worldwide sales, and the record contains only U.S. and Canadian sales of subject merchandise,141 it is not feasible at this time to separate expenses associated with U.S. and comparison market sales so that a change cannot be made at this time without distortion.142

Commerce’s Position: We agree with Liang Hah Heng that it would be inappropriate to revise Liang Hah Heng’s packing costs at this late stage in the investigation because based on the information on the record, we find that Liang Hah Heng properly reported its packing expenses. Liang Hah Heng described its packing expenses and allocations in its Section A response, Section B response, and Section C response.143 Commerce examined this information at verification,144 and found no

133 Id. 134 Id. at 10-11. 135 Id. at 11. 136 Id. 137 Id. 138 Id. at 11, citing to Liang Hah Heng’s Sales Verification Report at 18 and Exhibit LHH-12; and Liang Hah Heng’s BQR at Exhibit B-11. 139 Id. at 11, citing to Liang Hah Heng’s Sales Verification Report, Exhibit LHH-12 at page 1. 140 Id. at 11. 141 Id. at 12. 142 Id. 143 See Liang Hah Heng’s AQR at page A-4; Liang Hah Heng’s BQR at page B-31 and Exhibit B-11 (which demonstrates Liang Hah Heng’s packing calculation and provides a list of the specific packing materials used); and, Liang Hah Heng’s CQR at page C-34 - C-35, and Exhibit C-10 (which also demonstrates Liang Hah Heng’s packing calculation and provides a detailed list of the specific packing materials used). 144 See, e.g., Liang Hah Heng’s Sales Verification Report at 11, 14, 18, 19 and Verification Exhibit LHH-12, “Packing.” See also, Verification Exhibits LHH-13 through LHH-32, which cover all of the U.S. and TC sales examined at verification.

discrepancies with the information presented in the questionnaire response.145 The petitioner, who participated fully in this investigation and who submitted numerous comments on Liang Hah Heng’s questionnaire responses,146 had ample opportunity to comment on this issue, but did not.147 The petitioner raised this issue for the first time in its case brief at a time when it is too late for Commerce to determine whether it was necessary to gather additional data to test the petitioner’s allegation. In addition, by raising the issue at the briefing stage of the investigation, the petitioner did not allow Commerce sufficient time to solicit comments from all parties, to properly consider the issue, including clarifying aspects of the petitioner’s argument, and to make a reasonable determination on the basis of comments from all parties within the statutory prescribed deadline.

Further, with respect to Commerce’s differential pricing methodology, we agree with Liang Hah Heng that the Cohen’s d test does not adjust for packing expenses,148 so that any changes to Liang Hah Heng’s reported packing expenses or packing methodology would have no effect on Commerce’s differential pricing analysis.

Therefore, because we find no discrepancies with respect to how Liang Hah Heng reported its packing expenses, and because the information required to analyze the petitioner’s allegation is not on the record of this investigation, and the allegation cannot be analyzed further without collecting additional information (which is not possible in this case given the late stage at which the allegation was first made), we have made no changes to Liang Hah Heng’s packing costs.

Comment 5: Liang Hah Heng’s Reported Costs

Petitioner’s Comments • Liang Ha Heng’s reported costs are erroneous because they include a yield factor that is unsupported. • The allocation of costs between subject and non-subject products are suspect due to the production quantities and unit values used in the allocation methodology. • There were unexplained adjustments to the cost of goods sold. • Liang Hah Heng’s proposed adjustment to labor costs for products that were larger or smaller in width and thickness is unsupported and should not be accepted for the final determination.

145 See, generally, Liang Hah Heng’s Sales Verification Report. 146 See, e.g., the petitioner’s letter, “Rubber Bands from Thailand: Petitioner’s Comments on Liang Hah Heng Responses to Sections A, B, C and D of the Antidumping Questionnaire,” dated June 22, 2018, Petitioner’s Pre- Preliminary Determination Comments on Liang Hah Heng, Petitioner’s Cost Verification Comments on Liang Hah Heng, Petitioner’s Sales Verification Comments on Liang Hah Heng, 147 Id. 148 See, generally, the Preliminary Decision Memorandum at “Determination of the Comparison Method,” and “Results of the Differential Pricing Analysis,” on pages 6-8. See also Liang Hah Heng’s Final Analysis Memorandum at Attachment 3, line 2866 which shows that packing is not included in the net price used for the differential pricing analysis.

Liang Hah Heng’s Comments • All of these items were verified, and nothing warrants an adjustment.

Commerce’s Position: We agree with Liang Hah Heng that we should use the direct material and labor costs, as reported, for purposes of calculating a margin for the final determination. Liang Hah Heng has accounted for and reported all of its manufacturing expenses as shown in its cost reconciliation as well as in its overall cost allocation worksheet.149 Furthermore, all differences between the costs from the cost allocation worksheet and the costs in the trial balance have been included in the reported costs through cost variance adjustments. Therefore, all costs from the financial statements have been captured in the reported costs.

In Liang Hah Heng’s reporting methodology, yield losses have been included in the reported per- unit costs. Liang Hah Heng explained and demonstrated its methodology for reporting yield losses in its reported costs, which were developed based on the company’s actual experience and targeted production activity.150 We obtained information at verification to test the yield factors used in the reported costs by reviewing the actual yield losses incurred by production stage at the factory. For a sample of products, we found that the actual yield loss experience was within a reasonable range of the yield that was included in the reported costs.151 Therefore, we do not find the reported yield losses included in the reported costs to be unreasonable.

With regard to material costs, rubber costs differ between products because Liang Hah Heng produces merchandise with differing percentages of rubber content.152 Liang Hah Heng presented its production formulas or recipes at verification which the plant manager explained are the product-specific formulas that are used to determine the mix of inputs needed for each production order. At verification, on a sample basis, we tested the rubber input in the preselected CONNUMs by tracing the raw material inputs back to the production orders which list the quantity of each input used to make the finished rubber band. We also traced the values back to the material production formulas maintained in the ordinary course of business. As a result of our testing, we did not find the production formulas used to be unreasonable and therefore disagree with the petitioner that it was inappropriate to use Liang Hah Heng’s production formulas.

The petitioner questions the reductions to the cost of goods sold (COGS) for ending finished goods and work in process (WIP) inventory balances. In fact, the way that Liang Hah Heng has presented its reconciliation shows that it calculated the cost of manufacturing (COM) as the COGS minus the beginning finished good inventory and plus the ending finished good inventory. This follows the correct accounting theory of reconciling COGS to COM. Because COM represents the cost of manufacturing rubber bands during the POI, it would be incorrect to include in the average cost computation the cost of rubber bands in inventory that were not produced during the POI. Therefore, the “reduction” in costs was simply the exclusion of

149 See Liang Hah Heng’s letter, “Antidumping Duty Investigation of Rubber Bands from Thailand: Third Supplemental Section D Questionnaire Response,” date August 9, 2018, at Exhibit SD3-5. 150 See Liang Hah Heng’s Cost Verification Report at page 6-7. 151 Id. 152 See Liang Hah Heng’s Cost Verification Report.

beginning finished good inventory which was not produced during the POI. And likewise, adding the ending finished good inventory is necessary as that ending inventory was produced during the POI.

As part of the POI COM, the change in work in process (WIP) inventory is relevant. Because the WIP is processed into finished goods during the year, the beginning WIP would be added to the costs of manufacturing and the ending WIP would be deducted from the COM. This ensures that all of the manufacturing costs incurred in producing finished goods during the POI are included in total COM. We do not find Liang Hah Heng’s “reduction” in costs for ending WIP to be problematic, as it is an integral part of the equation in computing total POI COM.

In its normal course of business, Liang Hah Heng does not track labor costs to individual products. From our initial review of the questionnaire responses, it appeared that Liang Hah Heng had computed labor costs for general categories of products with the same reported per- unit labor costs. Subsequently, Liang Hah Heng attempted to further differentiate its reported product-specific labor costs based on theoretical calculations which either increased or decreased labor costs for the products that fell above or below a certain thickness or width range. However, we noted after conducting the CONNUM per-unit cost testing at verification that the originally reported per-unit labor costs were computed specific to each product and CONNUM, based on specific product throughput rates.153 Because Liang Hah Heng had differentiated its product labor costs using throughput rates, which are product-specific, we have determined that it is not necessary or reasonable to use a theoretical method to further differentiate labor costs. Therefore, for the final determination, we have recalculated Liang Hah Heng’s labor expenses to exclude the adjustments to labor costs based on this theoretical method.154

At verification, while conducting our trace of production quantities back to underlying documents, we noted two differences between the actual production quantities shown in the supporting documents and the production quantities shown in the worksheet used for the reported cost allocations. We noted that these were isolated instances where the staff had made data entry errors due to misreading the decimal figures in the supporting documents. Liang Hah Heng presented a corrected cost allocation schedule which we tested at verification, finding no additional errors. In addition, we tested an additional sample of the next highest quantity products and did not find any further discrepancies. Therefore, we find these errors to be exceptions that do not call into question the overall reasonableness of the cost reporting methodology.

Comment 6: G&A Expenses for Liang Hah Heng

Petitioner’s Comments • Hah Shung Heng’s G&A expenses, including the excluded purchase taxes, should be included in Liang Hah Heng’s G&A rate. • Rental income should be excluded from the G&A rate calculation.

153 Throughput rates maintained in the ordinary course of business measure the maximum rate at which the rubber bands and other rubber products can be processed. 154 See, Liang Hah Heng’s Final Cost Calculation Memorandum.

Liang Hah Heng’s Comments • It would be erroneous to include any of Hah Shung Heng’s G&A expenses in Liang Hah Heng’s G&A rate as there are no transactions between the two companies. Further, G&A expenses are supposed to be computed on a producer-specific level. Lastly, according to Liang Hah Heng, the purchase taxes are included, not excluded from Hah Shung Heng’s G&A expense rate. • Rental revenue should be included, as the related rental expenses have been included in reported costs.

Commerce’s Position: We disagree with the petitioner. It is Commerce’s normal practice to calculate the G&A expense ratio separately for the companies of a collapsed respondent, and to apply the separate ratios to each company’s cost of manufacturing before weight averaging their costs of production together.155 Financial expenses are calculated and applied in the same manner, i.e., company specific, unless the results of the two collapsed respondents are reported in the same consolidated financial statements, in which case, the companies would have the same financial expense ratio. Here, Hah Shung Heng and Liang Hah Heng are not part of the same consolidated financial statements. Therefore, in keeping with Commerce’s practice with regard to collapsed entities, we have continued to calculate and apply company-specific G&A and financial expense ratios for this final determination. In doing so, we note that although the petitioner had indicated that purchase taxes have been excluded from Hah Shung Heng’s G&A expenses, they have not.156

We have also continued to allow the revenue from rental activity as an offset to Liang Hah Heng’s COP. It is Commerce’s practice to include income offsets to G&A, if they relate to the general operations of the company as a whole and not to a separate line of business. The offsets do not have to be related directly to the production of subject merchandise.157 Based on the evidence in this proceeding, we find that the revenue offset claimed by Liang Hah Heng is a part of the company’s general operations158 and that none of the underlying activities constitutes a separate or major line of business. Further, as we noted in our cost verification report, the costs associated with the revenue earned from the rental activity are fully included in the calculation of the reported costs.159 Accordingly, we find no reason to exclude the rental income from our G&A ratio calculation for the final determination.

155 See, e.g., Polyethylene Terephthalate Film, Sheet, and Strip from Taiwan: Final Results of Antidumping Duty Administrative Review, 76 FR 9745 (February 11, 2011), and accompanying IDM at Comment 2. 156 See Exhibit SD2-12 of Liang Hah Heng’s August 6, 2018, Supplemental D Response where the non-refundable purchase taxes are included in the Hah Shung Heng G&A ratio calculation. In the supporting calculation worksheet in exhibit SD2-12, all of the administrative expenses, including purchase taxes, are included in the total administrative expenses. The only expense that is “excluded” in the schedule is exchange losses. 157 See, e.g., Certain Cold-Rolled Carbon Steel Flat Products from Taiwan: Notice of Final Determination of Sales at Less Than Fair Value, 67 FR 62104 (October 3, 2002), and accompanying IDM at Comment 6; see also CWP From Korea and accompanying Issues and Decision Memorandum at Comment 2. 158 See Liang Hah Heng’s Cost Verification Report, at 16. 159 Id.

Comment 7: Commerce’s Application of Quarterly Cost Methodology to U. Yong

U. Yong’s Comments • The change in costs calculated for purposes of determining whether quarterly costs should be used was flawed. • There was no significant cost change during the POI because the change in cost did not exceed Commerce’s 25 percent threshold if Commerce used a different calculation using the beginning period high quarterly total cost of manufacturing as the denominator. • Commerce’s methodology for determining a significant cost change is flawed because it overstates the significance of cost decreases by basing the denominator of the ratio on the lowest quarterly cost. • Commerce’s methodology is not consistent with the requirement that Commerce should calculate dumping margins as accurately as possible. • Commerce’s methodology fails to take into account that the highest and lowest quarterly cost periods were often the beginning and last quarterly periods where the cost changes were ultimately smoothed out over the entire POI. • Record evidence indicates that there is insufficient linkage between U. Yong’s cost and sales prices in the quarterly cost analysis to justify use of alternative cost averaging periods. • Commerce ignored data that sales information for the third-country CONNUM shows no correlation between any changes in cost for this CONNUM and changes in sales prices. • Commerce’s use of the quarterly cost methodology in the preliminary determination distorts the margin because it has limited the number of comparison market sales available for comparison to U.S. sales.

Petitioner’s Rebuttal Comments • The respondent’s assertion that Commerce arbitrarily overweighs cost increases versus cost decreases in their analysis of cost changes during the POI is misplaced because Commerce is merely expressing the threshold as the difference between the highest cost and the lowest cost as a percentage of the lower amount. • No matter whether the respondent’s revised methodology or Commerce’s standard methodology is used to analyze whether the 25 percent threshold was met, the respondent’s costs significantly changed during the POI. • Commerce should reject the respondent’s attempt to limit the linkage analysis to the comparison market because Commerce’s linkage analysis also considers U.S. prices.

Commerce’s Position: We continue to find that the application of Commerce’s quarterly cost-averaging methodology in this case is warranted for purposes of this final determination. In determining whether to deviate from our normal methodology of calculating an annual weighted-average cost, we evaluate the case-specific record evidence by examining two primary criteria: (1) the change in the COM recognized by the respondent during the POI must be deemed significant; and (2) the record evidence must indicate that sales during the shorter cost-averaging periods can be reasonably

linked with the cost of production or constructed value during the same shorter cost-averaging periods.160

In prior cases, we have established 25 percent as the threshold (between the high- and low- quarter COM) for determining that the changes in COM are significant enough to warrant a departure from our standard annual-average cost approach.161 In the instant case, record evidence shows that U. Yong experienced significant cost changes between the high and low quarterly COM during the POI.162

As for our methodology for measuring the change in the COM, we use this methodology to measure the volatility of COM between quarters of the POI, regardless of whether the COM is trending consistently up, consistently down, or consistently up and down during the POI. In certain cases, even though the relative change in costs may not be significant, when comparing the costs at the beginning of the POI to those at the end of the POI, the change within the period may be significant. As such, Commerce’s approach of dividing the difference between the highest and lowest average quarters’ COM by the lowest average quarter’s COM equally applies in periods where the costs are increasing, decreasing, or tending in both directions during the POI, because it measures volatility in costs between quarters regardless of when the volatility occurs. In other words, Commerce’s approach sets the same standard for measuring the significance of the change in the cost regardless of the direction(s) the costs are trending during the POI. Commerce’s approach of dividing the difference in cost between the highest and the lowest average quarters’ COM by the lowest average quarter’s COM for the POI results in a neutral, predictable, and reasonable way to measure the change in costs to determine if it meets the 25 percent threshold, regardless of whether costs are increasing, decreasing, or trending in both directions during the POI.163

Because we found the changes in costs to be significant, we evaluated whether there is evidence of linkage between the cost changes and the sales prices during the POI. The record evidence shows that U. Yong’s sales prices during the shorter cost-averaging periods in the POI are reasonably linked with the COM during the same quarter.164

Comment 8: Rubber Band Variance Allocation for U. Yong

Petitioner’s Comments • Plastic bags have disproportionately been allocated variances understating rubber band costs. • No record evidence supports the disproportionate allocation of variances between plastic bags and rubber bands.

160 See Stainless Steel Sheet and Strip in Coils from Mexico: Final Results of Antidumping Duty Administrative Review, 75 FR 6627 (February 10, 2010) and accompanying Issues and Decision Memorandum (IDM) at Comment 6 and Stainless-Steel Plate in Coils from Belgium: Final Results of Antidumping Duty Administrative Review (SSPC Belgium Final), 73 FR 75398 (December 11, 2008) and accompanying IDM (at Comment 4. 161 See SSPC Belgium Final IDM at Comment 4. 162 See U. Yong’s Final Cost Calculation Memorandum. 163 See Certain Polyester Staple Fiber from South Korea: Final Results of the 2008-2009 Review, 75 FR 64252 (October 19, 2010) and accompanying Issues and Decision Memorandum at Comment 2. 164 See U. Yong’s Final Cost Calculation Memorandum.

• Labor costs for rubber bands have been significantly understated when a more appropriate allocation based on the relative cost of sales of plastic bags and rubber bands is considered.

U. Yong’s Rebuttal Comments • It is not appropriate to allocate the variances between plastic bags and rubber bands on the basis of their cost of goods sold because U. Yong tracks variances on a more detailed basis, identifying the difference between standard and actual costs for each specific rubber band and plastic bag product. • Similarly, labor variances should not be allocated proportionally based on the cost of goods sold because labor variances have already been calculated for each work order in the rubber band and plastic bag workshops as reflected in the respondent’s financial and cost accounting systems. • The petitioner’s argument regarding misallocation of labor costs is based on the premise that U. Yong accumulated total labor costs and then allocated them proportionally to rubber bands and plastic bags. U. Yong indicates that Commerce observed that rubber band and plastic bag workshop costs were tracked separately in its accounting systems.165 • U. Yong argues that Commerce observed in the U. Yong Cost Verification Report that U. Yong’s cost accounting system utilizes a monthly readjustment to standard value and therefore, the “cost value and readjustment” is appropriate.166

Commerce’s Position: We find that U. Yong’s reported CONNUM-specific costs reasonably reflect the cost to produce rubber bands and were accurate. We established through our cost reconciliation that the total reported costs of plastic bags and rubber bands agreed to the total actual costs from the audited financial statements.167 The next level of aggregate cost accumulation is at the workshop level where U. Yong tracks total costs at the plastic bag workshop separately from the rubber band workshop.168 At the next level of further detail, U. Yong tracks product specific costs by work order which itemizes the actual material cost, standard labor and standard overhead of each plastic bag or rubber band produced. The standard cost of labor and overhead is calculated by multiplying the standard labor and overhead rate (i.e., cost) by the product-specific actual production time to produce the product.169 U. Yong allocated the total POI labor and overhead variances to each work order for rubber bands based on the relative standard cost of each product.170 We find this methodology of allocating variances reasonable because each product receives its proportional share of the variance based on its product specific standard cost. Once the total work order costs for each product were cumulated, U. Yong divided them by the corresponding actual finished production quantities produced to calculate a per-unit cost. If more than one product fits within the definition of a CONNUM, the costs for all the products were weight-averaged to determine the CONNUM-specific cost. While we did note certain anomalies for specific work orders at the preliminary determination and confirmed these

165 See U. Yong’s Rebuttal Brief at 4, citing to U. Yong’s Cost Verification Report at 8. 166 Id. at 5, citing to U. Yong’s Cost Verification Report at 9. 167 See U. Yong’s Cost Verification Report at 7. 168 Id. at 6. 169 See U. Yong’s Cost Verification Report at 5. 170 Id. at 5-6.

anomalies at verification; we did not note any issues with work orders or CONNUMs other than those noted in the cost verification report which were the same as those identified in the preliminary determination.171 We addressed these anomalies with the affected work orders in the preliminary determination172 and are satisfied that once corrected, the reported CONNUM- specific per-unit costs are reasonable and accurate. We tested the reported costs at verification by tracing the total standard costs of plastic bags and rubber bands to the company’s general ledger.173 Additionally we traced the POI cost of manufacturing from the inventory ledger to a POI list of work orders showing that all rubber band work orders were included. We traced the standard labor cost and standard overhead cost for rubber bands to the list of work orders and then traced selected transactions to individual work orders.174 We do not find it appropriate to use an alternative variance allocation methodology based on the relative cost of sales of plastic bags to rubber bands as proffered by the petitioner when U. Yong has already used a reasonable methodology to report CONNUM-specific per-unit costs for this final determination.

Comment 9: Monthly Adjustment to Standard Costs for U. Yong

Petitioner’s Comments • U. Yong’s monthly adjustment to its standard cost of rubber bands does not make sense and should be disallowed.

U. Yong’s Rebuttal Comments • The monthly adjustment to standard costs makes sense and should continue to be made. It is an adjustment to the beginning rubber bands inventory, which reflects the weighted-average rubber value from purchases from the previous month, in order to reflect the current standard cost.

Commerce’s Position: We reviewed this reconciling adjustment in the cost reconciliation at verification and determined that it was a necessary step in reconciling the total of the costs reported to Commerce for rubber bands and the actual COGS reported on the audited financial statements. In reconciling the actual COGS from its audited financial statements to the cost of manufacturing (COM) reported to Commerce U. Yong made an adjustment to the total standard COGS from its normal books and records which included a revaluation of the total standard cost of finished goods inventory at the beginning of each month to reflect a new standard value based on the actual purchase cost of materials from the prior month. At verification we noted that this adjustment was necessary to adjust the total standard COGS of rubber bands to reflect the total standard COM of rubber bands. To arrive at the standard COM of rubber bands, U. Yong had to adjust the total standard COGS for beginning finished goods inventory, ending finished goods inventory and this adjustment so that goods produced prior to the POI (i.e., beginning finished goods inventory) were not included in the POI standard COM and goods produced during the POI but not sold during the POI (i.e., ending finished goods inventory) were included in the POI standard COM. At verification, we traced this reconciling adjustment (titled “cost value and readjustment

171 Id. at 2. 172 See U. Yong’s Final Cost Calculation Memorandum at Attachments 3 and 4. 173 See U. Yong’s Cost Verification Report at 8. 174 Id. at 10.

amount”) to the inventory movement ledger and determined that this adjustment was necessary to arrive at the standard COM per the financial accounting system and therefore, the adjustment must be included in order to properly account for and to remove the effects of the change in finished rubber band inventory from the beginning of 2017 through the end of 2017 in calculating the COM.175

Comment 10: Appropriate CONNUM for Rubber Bands of Mixed Sizes

Background: The Initial AD Questionnaire specified five criteria (i.e., rubber content, rubber type, size, width, thickness) in the CONNUM construction. U. Yong, however, reported several sales consisting of bags of rubber bands in assorted sizes, for which there were no specific instructions for the CONNUM construction. When reporting sales of rubber bands containing assorted widths, sizes, and thicknesses, U. Yong classified those attributes in the largest CONNUM category for the largest respective width, size, and thickness.176

Petitioner’s Comments • Commerce should apply an adverse inference for sales by applying the higher of the: highest margin alleged in the petition or highest transaction margin for all sales of mixed- size products for the following reasons: o U. Yong should have raised the issue with Commerce and asked for guidance on how to properly report mixed sizes since the Initial AD Questionnaire instructs respondents to contact the official in charge before preparing the response.177 o Sections 776(a)(1) and 776(a)(2)(A)-(D) of the Act, provide for the use of the facts otherwise available in making a determination.178 Once Commerce determines that facts available are warranted, section 776(b) of the Act permits Commerce to apply an “adverse inference” if Commerce makes an additional finding that a party has “failed to cooperate by not acting to the best of its ability to comply with a request for information.”179 o It is unclear which CONNUMs in U. Yong’s sales listing are correct. Any products coded as “02” through “05” may include smaller sizes based on U. Yong’s mis- reporting of the product characteristics. Commerce should apply an adverse inference to those sales for which the code representing the size in inches is higher than “01” (i.e., the smallest size category).180 Commerce has recognized that pervasive mis- reporting of data is grounds for adverse facts available (AFA) and AFA is required when inaccuracies affect “home market and U.S. sales listings, such that these sales listings no longer form a reliable basis on which to calculate a dumping margin.”181

175 Id. at 9. 176 See Petitioner’s Case Brief on U. Yong at 4, citing to U. Yong’s Sales Verification Report at 9. 177 Id. at 4, citing to the Initial AD Questionnaire at D-2. 178 See section 776(b)(1)(A) of the Act. 179 See Petitioner’s Case Brief on U. Yong at 5, citing to Fujian Mach. and Equip. Imp. & Exp. Corp. v. United States, 178 F. Supp. 2d 1305, 1332 (CIT 2001). 180 Id. at 6. 181 See Petitioner’s Case Brief on U. Yong at 5, citing to Certain Carbon and Alloy Steel Cut-To-Length Plate from Belgium: Final Determination of Sales at Less Than Fair Value and Final Determination of Critical Circumstances, in Part, 82 FR 16378 (April 4, 2017) and accompanying Issues and Decision Memorandum (Issues and Decision

Further, AFA is applicable where, as in this proceeding, the respondent did not “put forth its maximum effort” to provide accurate and comprehensive information.182

U. Yong’s Rebuttal Comments • U. Yong argues that reporting the CONNUMs for mixed-size bags does not warrant AFA for the following reasons: o Commerce’s questionnaire did not give instructions on how the CONNUMs for bags of mixed sizes, widths, thicknesses should be reported.183 Rather, it provided instructions for five specified CONNUM criteria (i.e., rubber content, rubber type, size, width, thickness).184 These CONNUM criteria applied to the vast majority of U. Yong’s products, which were sold as single-sized items. U. Yong then reported the mixed bag items based on the size, width, and thickness of the largest rubber bands in the mixed bag. o U. Yong did not withhold any information that was requested by Commerce. U. Yong’s reporting of CONNUMs was timely and as requested according to the criteria set forth. U. Yong argues that the petitioner did not explain how U. Yong did not act to the best of its ability and did not assert that the CONNUMs reported for mixed bags significantly impeded the proceedings or were unverifiable. As a consequence, U. Yong argues that criteria for AFA were not met.185 o The U. Yong Sales Verification Report explains that U. Yong reported the CONNUM for mixed bags using the CONNUM for the largest size category and did not state that this methodology was wrong or inconsistent with Commerce’s instructions for how to report CONNUMs.186 • U. Yong’s reporting of the CONNUM for mixed bags has no margin effect. U. Yong identifies its mixed bags by a unique item number and work order number.187 Even though the CONNUM coded was for the largest size rubber band in the mixed bag, U. Yong argues that, because the item number and work order numbers for the mixed bags were unique, the cost data for the mixed bag item was unique as it can be traced to specific work orders that applied only to the production of the mixed bag items and not any other items.

Commerce’s Position: We agree that U. Yong appropriately reported the CONNUM, prices and costs for its merchandise consisting of bags of rubber bands with mixed widths, sizes and thicknesses. Specifically, U. Yong reported its product codes for rubber bands identifying those containing

Memorandum for the Final Affirmative Determination in the Less-Than-Fair-Value Investigation of Certain Carbon and Alloy Steel Cut-to-Length Plate from Belgium) at Comment 9. 182 Id. at 5, citing to Deosen Biochemical Ltd. v. U.S., 307 F. Supp. 3d 1364, 1369 (CIT 2018). 183 See U. Yong’s Rebuttal Brief at 6. 184 Id. 185 See U. Yong’s Rebuttal Brief at 6, citing to section 776(a)(2)(A)-(D) of the Act. 186 See U. Yong’s Rebuttal Brief at 7, citing to U. Yong’s Sales Verification Report at 2 and 9. 187 Id. at 7, citing to U. Yong’s Sales Verification Report at 9.

assorted dimensions in its AQR188 and SAQR.189 Our verification noted that U. Yong identified bags of rubber bands of mixed size, width, and thickness, using the CONNUM for the largest item reported on the U.S. and/or third-country sales databases.190 We found no discrepancies in U. Yong’s reported U.S. prices. An examination of U. Yong’s U.S. product code (PRODCODU) buildup, reveals that bags of rubber bands with mixed widths, sizes and thicknesses are easily identified.191 Therefore, contrary to the petitioner’s allegation, one can identify all sales of rubber bands with mixed sizes in the U.S. sales database.192 Similarly, any CONNUMs with any given size attributes (i.e., widths, sizes, and thicknesses) reported in the third-country sales database can be traced to the product codes also reported in the third-country sales database.193 Since the CONNUMs consisting of mixed bag attributes can be identified in product codes reported in the third-country sales database, the standard computer program identified the appropriate source of normal value.194 Although U. Yong did not confer with Commerce prior to submitting its U.S. and third-country databases, U. Yong made a reasonable decision to treat the bags of mixed-sized rubber bands as if they were made of the largest applicable width, size, and/or thickness.195 As a consequence, there is no evidence that U. Yong understated its prices or costs by grouping rubber bands of assorted characteristics into the largest respective categories, or gained any inappropriate advantage by means of its reporting methodology. As a result, we cannot conclude from this reporting methodology that U. Yong withheld information from Commerce or failed to cooperate to the best of its ability.

Because U. Yong reported its bags of mixed-sized rubber bands in a transparent and accurate manner, and because we found no discrepancies with its reported information at verification, we will base our margin calculations for the final determination on U. Yong’s CONNUM, sales and cost information, as reported in its questionnaire responses, and adjusted at verification.

Comment 11: U. Yong’s U.S. Indirect Selling Expenses

Petitioner’s Comments • Commerce should calculate and apply a corrected indirect selling expense (ISE) ratio, because Commerce discovered at verification that U. Yong overstated the denominator for the indirect selling expense (ISE) ratio, and therefore, the ISEs are understated.196

188 See U. Yong’s letter, “Rubber Bands from Thailand: Section A Questionnaire Response,” dated May 10, 2018 (U. Yong’s AQR) at Exhibit A-12. 189 See U. Yong’s letter, “Rubber Bands from Thailand: First Supplemental Section A Questionnaire Response,” dated June 8, 2018 (U. Yong’s SAQR) at Exhibit Supp. A-7. 190 See U. Yong Sales Verification Report at 2 and 9. 191 See U. Yong’s SAQR at Exhibit Supp. A-7. 192 See U. Yong’s CQR at Exhibit C-12. 193 See U. Yong’s 2nd SQR at Exhibit SQABC 12. 194 See, generally, U. Yong’s Final Analysis Memorandum at Attachment 3. 195 Id. See also U. Yong’s CQR at Exhibit C-12. 196 See Petitioner’s Case Brief on U. Yong at 6, citing to U. Yong Verification Report at 17.