United States Court of International Trade
Court Affirmed Redetermination Results
In sister cases, Peer-Bearing Company-Changshan v. United States et al., Court Nos. 10-13 and 11-22, Slip Op. 15-142/143 (December 21, 2015) the court affirmed a second redetermination in the twenty-first and twenty-second administrative reviews of an antidumping duty order on tapered roller bearings (TPB’s). See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People’s Republic of China: Final Results of the 2007-2008 Admin. Review of the Antidumping Duty Order, 75 Fed.Reg. 844 (Int’l Trade Admin. Jan. 6, 2010) (“Final Results”); Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People’s Republic of China: Final Results of the 2008-2009 Antidumping Duty Admin. Review, 76 Fed. Reg. 3,086 (Int’l Trade Admin. Jan. 19, 2011) (“Final Results”).
The Second Remand Redetermination addressed the only issue remaining in this litigation - whether certain TRBs produced in Thailand from Chinese-origin parts are subject to the Order. Plaintiff Peer Bearing Company-Changshan (“CPZ”), a Chinese producer and exporter of TRBs and a respondent in the twenty-first and twenty-second reviews, initiated this action to contest, inter alia, the Department’s determination in the Final Results that certain TRBs that were produced in, and exported from, Thailand were of Chinese origin for antidumping purposes and therefore were merchandise subject to the Order. Defendant-intervenor The Timken Company (“Timken”), a domestic TRB producer and petitioner in the twenty-first and twenty-second reviews, initiated separate actions contesting the Final Results that have been consolidated with CPZ’s action.
Before Commerce, CPZ submitted information on the manufacturing processes performed on its TRBs during the POR. CPZ reported that in its Chinese facilities it produced finished TRBs, finished TRB components (cages and rollers), and unfinished TRB components (cups and cones). The TRBs that are the subject of CPZ’s claim underwent manufacturing operations conducted in Thailand by a CPZ affiliate. In China, CPZ forged, turned (i.e., machined), and heat-treated cups and cones but did not process these components into a finished form. In Thailand, CPZ’s affiliate completed the processing of the cups and cones by performing additional machining, i.e., grinding and honing to achieve the required final dimensions and polished surface. The Thai affiliate then assembled the finished cups and cones, together with finished rollers and cages that CPZ had manufactured in China and exported to Thailand, to produce completed TRBs that were exported to the United States.
For the first part of its test, Commerce considered the record evidence according to six criteria, drawing a conclusion under each as to whether the record supports or detracts from a finding that a substantial transformation had occurred in Thailand. The Department’s six criteria were: (1) whether the processed downstream product is of a different class or kind than the upstream product; (2) the extent to which the physical and chemical properties, and the essential character of the TRBs, were imparted in the third country, i.e., Thailand; (3) the nature and sophistication of the Thai processing operations; (4) the level of investment in the Thai operations; (5) ultimate use; and (6) the third country cost of manufacturing (“COM”) as a percentage of the total COM. For the second part of its test, Commerce evaluated these criterion-specific determinations collectively and made an ultimate finding on substantial transformation according to the “totality of the circumstances.” Using this test, Commerce did not find substantial transformation indicating that COM in Thailand did not significantly outweigh other factors.
However, in the previous Peer Bearing decision calling for this second remand, the court found that unfinished cups and cones were sent to Thailand and as a result of the extensive processing in Thailand, the cups and cones were finished and exported in a finished state. Moreover, it held that no single part made in China imparted the essential character of the TRBs. Thus the court held that there was no substantial evidence to support Commerce’s findings.
In the Second Redetermination, Commerce found that level of investment was significant, that the physical properties and essential character was transformed in Thailand, and that applying the reasoning of the court, the ultimate use of the unfinished cones and cups was to become finished cones and cups for further processing. Without the processing in Thailand, the cones and cups could not be used for further assembly. Thus, Commerce found that according to the totality of the circumstances, the TRBs are further processed in Thailand and substantially transformed to confer Thai origin.
The court was not persuaded by Timken’s arguments that the Second Remand Redetermination was not supported by substantial evidence and affirmed accordingly in both cases.
Court Remanded 2012 CVD Review Based on Calculations in a Previously Remanded 2011 CVD Review
In Toscelik Profil ve Sac Endustrisi A.S. v. United States, Court No. 14-211, Slip Op. 15-144 (December 21, 2015) plaintiff, Toscelik Profil ve Sac Endustrisi A.S. (“Toscelik”), a producer of subject merchandise for the Turkish domestic and export markets, filed this action to contest Circular Welded Carbon Steel Pipes And Tubes From Turkey: Final Results of Countervailing Duty Administrative Review; Calendar Year 2012 and Rescission ofCountervailing Duty Administrative Review, in Part, 79 Fed. Reg. 51140 (Aug. 27, 2014) (“2012 CVD Review”). The matter concerned Toscelik’s net subsidy rate at .83%, which was incorporated into the 2012 CVD Review results by reference to the prior 2011 CVD Review segment of the CVD proceeding. The plaintiff challenged the posture of the 2012 CVD Review due to its successful litigation of the 2011 CVD Review. Because Commerce recalculated via remand the subsidy rate underlying Toscelik’s 2011 rate - corrected, on remand, to de minimis 0.44 percent, Toscelik’s opening brief argued that those results should extend to this 2012 review. The government’s sole objection was that Toscelik failed to exhaust that argument by filing a brief before Commerce in the first instance in the 2012 review.
However, because there was no record by which Commerce could review or correct for the 2012 review, it could have only gone back to the results in the 2011 CVD review which have now been corrected under a remand order. Since those results are at issue in the 2012 CVD review, the court saw no reason why Toscelik should be required to exhaust administrative remedies when the very issue was already addressed in remand of the 2011 CVD review. The court stated,” The flaw in the final result of the 2012 CVD Review is not a flaw of the twelfth review but rather a flaw of the eleventh, and there is no argument Toscelik could have made during the twelfth review that could possibly have resulted in redress of the error of the eleventh review. As such, the court agrees with Toscelik that the fact that there was no record on which to base any argument translates into a “useless formality” defense against an exhaustion argument.” Slip Op. pg.10. Because the law did not require Toscelik to file a brief in the 2012 review regarding a decision already made as a result of the 2011 review, the court found that it would be futile for Toscelik to be required to make such a filing.
For these reasons the court remanded this decision back to Commerce.