CCRA Rule 73 Submissions at 12 (par. 41). We note that the issue is not whether the starting prices were at the same level of trade (i.e, hospital buying groups),¹ but whether the CCRA made appropriate adjustments to bring the two starting prices back to the same position in the chain of distribution.² The CCRA states that it recognized that "normal value was not determined at the ex-factory point of shipment in Puerto Rico," but contends that its determination of normal value at Nycomed's Memphis warehouse location is properly "representative of the normal value of the like goods sold in the domestic market." Id. at 16. Nevertheless, the CCRA provides no justification for finding that Nycomed acquired, or took title to, the merchandise at its Memphis warehouse location rather than in Puerto Rico.

Similarly, the Determination on Remand does not point to any evidence that merchandise was treated any differently whether it was shipped to Canada from Puerto Rico or was shipped to the United States from Puerto Rico.³ Likewise, the CCRA Rule 73 Submissions do not provide any support for the decision to determine the export price as adjusted back to the Puerto Rico location but not to do so for normal value (and instead making the normal value determination with adjustments back to the Memphis location). See CCRA Rule 73 Submissions at 12-14. The failure of the CCRA to provide a reasoned analysis is particularly egregious because the CCRA was directed by the Panel to explain this methodological distinction. On the record and in the briefs, the CCRA decision on this issue appears purely arbitrary and the resulting antidumping duty margin appears to be artificial .⁴

The CCRA argues that "Article 2.4 of the WTO Anti-dumping Agreement does not state that the comparison must be made at the ex-factory level." CCRA Rule 73 Submission at 12-13 (par. 42). Nevertheless, the CCRA also admits that Article 2.4 requires that a "fair comparison shall be made between the export price and normal value." Id. quoting Article 2.4. The CCRA correctly indicates that the Panel must take its direction from SIMA and not the WTO Agreement, but SIMA appears to be in accord with the WTO Agreement in this regard. For example, SIMA section 15 provides that normal value is to be determined "at the place from which the goods were shipped directly to Canada . . . ." SIMA section 15(e). The parallel provision for export price likewise refers to the deduction of "all costs, charges and expenses resulting from the exportation of the goods, or arising from their shipment, from the place described in paragraph 15(e)." SIMA section 24(a)(iii).

The CCRA methodological authority under section 29 is broad and the CCRA's approach to determining margins under section 29 may vary greatly from case to case. Nevertheless, once it has selected a methodology, the CCRA must apply the methodology in a fair manner. The Panel required the CCRA to explain why it failed to deduct movement and insurance charges from Puerto Rico to Memphis on the normal value side of the equation, when it deducted such charges from Puerto Rico to Canada on the export price side of the comparison. Such explanation was necessary because the CCRA failed to establish the Memphis location as the proper end point in its methodological approach to expense adjustments. CCRA has not addressed the question in both the Determination on Remand and the CCRA's Rule 73 Submissions . The Panel can only conclude that the CCRA cannot, or will not, explain this difference in treatment of shipment costs despite the opportunity to do so. The CCRA certainly possesses great discretion in making its determinations under section 29. Nevertheless, the exercise of discretion cannot be arbitrary⁵ and the CCRA's decisions must be supported by reasoned analysis. Accordingly, the Panel cannot uphold the CCRA's Determination on Remand in this regard and orders that the CCRA deduct freight, insurance and other shipments costs from Puerto Rico to Memphis in its normal value calculations under section 29 or provide an explanation as to why movement costs were not deducted when such costs were deducted in determining export price.

Nycomed has asserted that, as well as an adjustment for freight, insurance and other shipment costs, there should be a deduction for profit in establishing the normal value of domestic sales. While recognizing that profit is a typical adjustment in margin calculations, the Panel also accepts that there may be a rational explanation for the CCRA not making that adjustment in this case. This might be inferred from the CCRA's other findings (especially those relating to whether the first domestic sale of the goods in the United States were in "the ordinary course of trade"). Nonetheless, the CCRA should have dealt with this issue explicitly as part of its response to the Panel's directions. It did not do so. Therefore, the Panel also remands the treatment of profit for reconsideration and requires the CCRA to either deduct the profit on the first domestic sale of the goods in the United States or explain why a deduction for profit was not necessary to achieve a fair comparison of prices for the purposes of section 29.

Conclusion

Accordingly, the Panel cannot uphold the CCRA's Determination on Remand. The Panel again remands the section 29 calculations to the CCRA to: (a) either deduct movement costs back to Puerto Rico in determining normal value or provide an explanation as to why movement costs were not deducted when such costs were deducted in determining export price; and (b) either deduct the profit on the first domestic sale of the goods in the United States or explain why a deduction for profit was not necessary to achieve a fair comparison of prices for the purposes of section 29. The remand determination shall be made within 30 days.

Signed in the Original by:

Brian E. McGill (Chair) Brian E. McGill (Chair) David J. Mullan David J. Mullan Mark R. Sandstrom Mark R. Sandstrom Leon E. Trakman Leon E. Trakman Shawna K. Vogel Shawna K. Vogel

Issued on the 26th day of May 2003.