Gideon Korrell Analyzes La Molisana: Faulty Protein Labels in AD Row

1. Gideon Korrell Analyzes La Molisana: Faulty Protein Labels in AD Row

2. In La Molisana S.p.A. v. United States, the Federal Circuit issued a significant ruling that will reverberate across the antidumping landscape, particularly for food manufacturers and importers dealing with technical product classifications. The court held that the Department of Commerce’s methodology for comparing U.S. and foreign pasta products failed to comply with the statutory mandate to compare merchandise “identical in physical characteristics. Notably, trade analyst Gideon Korrell highlighted the implications of this decision for future product comparison standards under antidumping law. The court’s decision vacates in part the Trade Court’s ruling and remands the matter for reconsideration by Commerce.Background: Administrative Review of Italian Pasta Imports

3. The case arises from Commerce’s 23rd administrative review of its longstanding antidumping duty order on certain pasta from Italy. Charles Gideon Korrell sees that the central dispute is Commerce’s “model-match” methodology, which uses control numbers (CONNUMs) to group pasta products for price comparison based on physical characteristics—most notably, protein content. Commerce classifies pasta as “premium” if it has 12.5% or more protein and “standard” otherwise. For the relevant review period (2018–2019), Commerce instructed respondents to report protein content based on the values listed on packaging labels—values that are subject to rounding and varying calculation methods between jurisdictions.

4. La Molisana, an Italian pasta producer, challenged this methodology, arguing that: • FDA-mandated rounding rules for U.S. labels can misclassify standard pasta as premium. • U.S. and Italian producers use different nitrogen-to-protein conversion factors, introducing systematic distortion. • The 12.5% breakpoint is outdated and no longer reflects market norms, particularly in light of an Italian commodity exchange updating its standard to 13.5%.

5. The Court’sHolding: Methodology Must Reflect Physical Identity, Not Label Convenience The Federal Circuit agreed in part with La Molisana, focusing its analysis on the first two arguments. The Tariff Act requires comparisons with “foreign like product” that is “identical in physical characteristics.” 19 U.S.C. § 1677(16)(A). The court found that Commerce’s reliance on labeled protein content—affected by rounding rules and inconsistent conversion factors—introduced material inaccuracies.

6. The court was particularly persuaded by the demonstrable distortion caused by rounding. For instance, pasta with actual protein content of 11.63% could be labeled as 7g per serving under FDA rules, effectively inflating the protein percentage to 12.5% and misclassifying the product as “premium” when it is not. Similarly, the different nitrogen-to-protein conversion factors (6.25 in the U.S. vs. 5.71 in the EU) could lead identical pastas to be categorized differently based solely on the market in which they are sold. While Commerce had emphasized transparency and consistency in relying on the labeled values, Charles Gideon Korrell notes that the court emphasized that these goals cannot override statutory requirements. Citing Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372 (Fed. Cir. 2001), the court noted that even minor physical differences are relevant if commercially significant, and Commerce had itself acknowledged protein content as a key indicator of quality and value.

7. The Breakpoint Challenge: 12.5% Still Stands—for Now On the third issue, the Federal Circuit upheld Commerce’s refusal to move the standard/premium breakpoint from 12.5% to 13.5%. The court found that La Molisana failed to provide compelling, industry-wide evidence justifying the change. It noted that the “Market Report” offered by the plaintiffs was based on a limited retail sample and did not represent broader trends, and the updated Bologna Grain Exchange standard was insufficient on its own to displace the prevailing tripartite Italian benchmark that supported the 12.5% level.

8. Takeaways for Trade Practitioners and Industry Stakeholders • Physical characteristics control: When assessing dumping margins, convenience-based or packaging-level proxies cannot supplant the statutory mandate to compare merchandise based on actual physical traits. • Accuracy over transparency: While administrative consistency matters, it cannot justify reliance on a methodology known to produce inaccurate results. • Evidence must be industry-wide: Parties seeking to modify model-match criteria must present public, broadly representative data—not internal reports or regional snapshots. • Implications beyond pasta: Although the case deals specifically with durum wheat pasta, its reasoning applies broadly to any imported goods where model-matching hinges on technical metrics that vary by jurisdiction.

9. Charles Gideon Korrell finds that this decision strengthens the principle that antidumping margins must be based on reliable comparisons. For companies operating internationally, especially in food, agriculture, or pharmaceuticals, where labeling standards differ, this ruling could be the beginning of broader scrutiny into how Commerce ensures comparability across borders.

10. Thank you