## Facts

- Commerce conducted an administrative review of an antidumping duty order covering tapered roller bearings from Japan, including sales by Koyo and its U.S. affiliate.
- In calculating Koyo’s weighted-average dumping margin, Commerce “zeroed” negative transaction-specific dumping margins rather than allowing them to offset positive margins.
- In computing constructed export price (CEP) for certain sales, Commerce applied adverse facts available (AFA) and used entered value (not sales value) as the base for the adverse rate.
- Koyo challenged the zeroing methodology at the Court of International Trade (CIT), arguing it conflicted with U.S. obligations reflected in WTO proceedings.
- Timken cross-challenged Commerce’s CEP/AFA approach, arguing entered value was an improper and too-lenient base.
- The CIT sustained Commerce on both issues; Koyo appealed and Timken cross-appealed.

## Issues

1. Whether Commerce may lawfully “zero” negative dumping margins when calculating a weighted-average dumping margin under 19 U.S.C. § 1677(35), despite contrary views expressed in WTO dispute reports.
2. Whether Commerce lawfully applied an AFA rate in the CEP calculation using entered value as the base rather than sales value.

## Decision

- The Federal Circuit affirmed the CIT in full.
- Commerce’s zeroing practice was upheld as a permissible interpretation of the antidumping statute under Chevron.
- WTO Appellate Body reports were not treated as directly controlling domestic judicial review of Commerce’s statutory interpretation.
- Commerce’s decision to apply AFA to entered value in the CEP calculation was upheld as reasonable and consistent with the statutory scheme.

## Legal Principles

- When the antidumping statute is ambiguous on a methodological detail, Commerce’s reasonable interpretation is entitled to Chevron deference.
- The statutory definitions of “dumping margin” and “weighted-average dumping margin” do not unambiguously require negative margins to offset positive margins; zeroing can be a permissible construction.
- WTO dispute outcomes do not automatically change U.S. law or invalidate agency practice; domestic legal effect depends on the U.S. implementation mechanisms prescribed by statute.
- Commerce has discretion in selecting an AFA methodology, including the base to which an adverse rate is applied in CEP-related calculations, so long as the approach is reasonable and not contrary to law.

## Conclusion

The Federal Circuit sustained Commerce’s use of zeroing in weighted-average dumping margin calculations and upheld Commerce’s application of an adverse rate to entered value in CEP calculations, holding both approaches lawful under Chevron and rejecting the claim that WTO reports were binding in domestic judicial review.


Timken Co. v. United States, 354 F.3d 1334 (Fed. Cir. 2004)