Trade Courts Update for Week of May 27, 2015

United States Court of International Trade

Commerce Remand Results Sustained

Before the court, in Fedmet Res. Corp. v. United States, Court No. 12-215, Slip Op. 15-48 (May 22, 2015, were the final results of Defendant United States Department of Commerce’s (“Commerce”) redetermination pursuant to this court’s Order, Fedmet Res. Corp. v. United States, No. 12-00215, (CIT March 30, 2015), ECF No. 89 (“Remand Order”), instructing Commerce to act in accordance with the Court of Appeals for the Federal Circuit’s (“CAFC”) decision in Fedmet Res. Corp. v. United States, 755 F.3d 912 (Fed. Cir. 2014).   In Fedmet the CAFC held that Commerce’s determination that the scope of the Orders extended to Fedmet’s Bastion magnesia alumina carbon bricks (“MACBs”) was unsupported by substantial evidence, explaining that “Fedmet’s [MACBs] are outside the scope of the countervailing and antidumping orders at issue in this case.” Fedmet, 755 F.3d at 922.  Accordingly, in its latest redetermination, Commerce found that Fedmet’s Bastion magnesia alumina bricks were not within scope of the Orders. This decision was then contested by defendant-intervenors who demanded a more precise scope definition of MACBs, and asked for a re-opening of the record to solicit additional information on testing alumina methodologies. The court disagreed, as the MACB definition was consistent with that provided by the CAFC.  As Commerce’s redetermination was in full compliance with the CAFC’s decision, the court sustained the remand results. 

 

Final Results Affirmed; Motion for Judgment on Agency Record Denied

In Zhaoqing New Zhongya Aluminum. Co., Ltd. v. United States, Court No. 14-43, Slip Op. 15-50 (May 27, 2015), plaintiff, Zhaoqing New Zhongya Aluminum Co., Ltd., (“Zhongya”) moved for judgment on the agency record contesting Defendant United States Department of Commerce’s (“Commerce”) determination to collapse into a single entity three affiliated exporters/producers, the Guang Ya group (“Guang Ya”), Zhongya, and Xinya, in Aluminum Extrusions From the People’s Republic of China: Final Results of Antidumping Duty Administrative Review and Rescission in Part 2010/12 (“Final Results of Administrative Review”), 79 Fed. Reg. 96 (Jan. 2, 2014).  Commerce found that Guang Ya, Zhongya, and Xinya were affiliated pursuant to 19 U.S.C. 1677 (A) and (F) and collapsed the three entities into a single entity based upon the claim that each entity was owned by a member of the Kwong family. Id. At 18,526-27. Commerce determined that the single entity was eligible for a separate rate and that the use of adverse facts available (“AFA”) was warranted for both the Guang Ya, Zhongya, Xinya, entity and the PRC wide entity. With respect to the antidumping investigation, Commerce concluded that the margin of 33.28% had probative value for the purpose of being selected as the AFA rate assigned to the Guang Ya, Zhongya, Xinya entity and the China-wide entity.  Guang Ya argued that Commerce was precluded from finding control “unless the relationship has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product.”  However, 19 C.F.R. § 351.401 (f) provides that Commerce may collapse affiliated producers where there “is a significant potential for the manipulation of price or production.” 19 C.F.R. § 351.401 (f)(1) (2014).  

According to the court, the intent of 19 U.S.C. § 1677(33) was to identify control exercised through corporate or family groupings. By interpreting “family” as a control person, Commerce was giving effect to this intent when it found that all 3 entities were part of the Kwon family. In determining whether there is a significant potential for manipulation Commerce considers the following factors: (i) the level of common ownership; (ii) the extent to which managerial employees or board members of one firm sit on the board of directors of an affiliated firm; and (iii) whether operations are intertwined, such as through the sharing of sales information, involvement in production and pricing decisions, the sharing of facilities or employees, or significant transactions between the affiliated producers. 19 C.F.R. § 351.401 (f). First, the court found because the Kwon family owns a percentage of Guang Ya, Zhongya, and Xinya, Commerce’s findings were accurate. Moreover, the Kwon’s common holdings of these three entities and Kwon’s ownership on the boards of Guang Ya and Zhongya provided the opportunity for manipulation.  Second, members of the Kwong family were managers and members of the board of directors in all three companies.  As for the third factor, evidence regarding intertwined operations during the period of review was limited due to Guang Ya and Xinya’s failure to cooperate. Thus, Commerce drew a reasonable inference from Guang Ya and Xinya’s lack of cooperation.  Moreover, there was evidence that Xinya made payments to Zhongya during the period of investigation.  The nature of payments were not clearly brought to light, as there was no consistent testimony.   Considering the overall circumstances, the court found Commerce’s decision reasonable as there was significant potential for manipulation.  Finally, because it is Commerce’s practice as to nonmarket economy (“NME”) exporters to presume that all exporters are under the control of the central government until they demonstrate an absence of government control, allowing a party to exit a collapsed entity after refusing to participate, would only permit manipulation by parties seeking a separate rate.  Both Xinya and Guang Ya did not participate, were collapsed with Zhongya and were given a PRC wide rate.

For all these reasons, Zhongya’s Motion for Judgment on the Agency Record was denied and Commerce’s Results were affirmed.