Trade Courts Update for Week of April 6, 2016

United States Court of International Trade

 

Denial of Plaintiff’s Motion for Judgment on the Agency Record  

The decision contested in Aluminum Extrusions Fair Trade Committee v. United States and Rheetech Sales & Services, Inc., Court No. 14-206, Slip Op. 16-31 (March 31, 2016) is the Final Scope Ruling on Rheetech Sales & Services Inc.’s Screen Printing Frames with Mesh Screen Attached, A-570-967, C-570-968 (Aug. 7, 2014) Commerce issued the Final Scope Ruling in response to a request (“Scope Ruling Request”) filed on March 4, 2014 by Rheetech Sales & Services, Inc. (“Rheetech”), a U.S. importer and the defendant-intervenor in this litigation. Commerce issued the Orders to which defendant-intervenor sought a scope request, in May 2011.  Aluminum Extrusions from the People’sRepublic of China: Antidumping Duty Order, 76 Fed. Reg. 30,650 (Int’l Trade Admin. May 26, 2011) (“AD Order”); Aluminum Extrusions from the People’s Republic of China:Countervailing Duty Order, 76 Fed. Reg. 30,653 (Int’l Trade Admin. May 26, 2011) (“CVD Order”). Plaintiff argued that the screen printing frames are “subject merchandise,” i.e., merchandise that is subject to the Orders. The Final Scope Ruling described the subject merchandise as “aluminum frames with a mesh screen attached for screen printing designs onto fabric” and as “welded 6063-T5 aluminum rectangular frames with polyester woven mesh glued to one side of the frame.” It also stated that “[t]he frames are imported completely assembled, with no finishing required before being sold.” Id. (footnote omitted). Commerce further stated in the Final Scope Ruling that “[a]s decribed by Rheetech, the screen printing frames are placed in screen printing machines and are inherently part of a larger whole,” and that “[t]he screen printing frames are fully and permanently assembled and completed, and are ready for installation into the screen printing machines, at the time of entry.”

According to the court, the intended meaning of the term “shapes and forms” was clarified by the following general scope language: “Aluminum extrusions are produced and imported in a wide variety of shapes and forms, including, but not limited to, hollow profiles, other solid profiles, pipes, tubes, bars and rods.” AD Order, 76 Fed. Reg. at 30,650; CVD Order, 76 Fed. Reg. at 30,654. The examples presented clarify the term that “shapes and forms” are of single extruded articles. These examples are an indication that the scope of the Orders was not intended to include, as a general matter, any assembled good that contains an aluminum extrusion as a part. The subject screen printing frames were not themselves “extrusions” but rather were assemblies, each of which consists of a frame, which is a welded assembly of extrusions, and a polyester mesh screen that is attached to the frame. It was clear that the frame was assembled by welding together extrusions that were of an aluminum alloy specified in the Orders.  Moreover, because the subject merchandise did not constitute subassemblies, but finished assemblies they were not included in the Orders.  Plaintiff’s arguments-- that the subject merchandise consisted of subassemblies or partially assembled merchandise, and that because one side of netting was not fully glued down that such merchandise was a part – were not persuasive to convince the court to overturn Commerce’s decision.

 

Final Results Remanded to Commerce

In Shandong Rongzin Import & Export Co., Ltd., v. United States and Dixon Ticonderoga Company, Court No.15-151, Slip Op. 16-32 (April 5, 2016), plaintiff, Shandong Rongxin Import & Export Co., Ltd., (“Shandong”) contested Commerce’s Final Results of the Antidumping Duty Administrative Review on Certain Cased Pencils from the People’s Republic of China (“PRC”), Certain Cased Pencils from the PRC, 80 Fed. Reg. 26,897 (Dep’t Commerce May 11, 2015) (Final Results of the Antidumping Duty Administrative Review) (“Final Results”).  Shandong contests Dixon Ticonderoga Company’s (Dixon) standing to ask for a review of Shandong, and Shandong additionally argued that a separate rate should be provided to Shandong because it is a non-PRC entity. 

During the review, Shandong provided evidence that Dixon’s affiliated Chinese exporter, Beijing Fila Dixon Stationary Company, Ltd., produces Dixon’s pencils in China. Therefore, in light of the evidence Shandong provided, Commerce may not correctly presume standing where Shandong did not address its position as a domestic interested party. For this reason, the court remanded the case back to Commerce to determine Shandong’s standing before it addresses the separate rate question.

 

United States Court of Appeals for the Federal Circuit

Federal Circuit Denied Petition for Rehearing

In ClearCorrect Operating LLC v. ITC, Court No.14-1527 (March 30, 2016), the Federal Circuit denied a petition regarding rehearing en banc holding the Commission has no jurisdiction to exclude infringing digital goods that are imported electronically.  Because digital goods are not “articles” under Section 337 as Congress wrote it, the Federal Circuit decided not to rehear its decision in this case. On dissent, Circuit Judge Pauline Newman argued that the decision conflicted with a decision in Suprema, Inc. v. International Trade Commission, 796 F.3d 1338, 1350 (Fed. Cir. 2015) (en banc), wherein the court reaffirmed that “the legislative history [of Section 337] consistently evidences Congressional intent to vest the Commission with broad enforcement authority to remedy unfair trade acts.” More importantly, the Circuit Judge Newman argued that statutory law should be adapted to its legislative purpose “in the context in advances in technology,” and therefore, the Commission correctly construed the term “articles.”  Therefore, Circuit Judge Newman respectfully dissented from the majority’s decision to deny the en banc rehearing.    

 

Decision Regarding Scope of Wire Rod Order Reversed

In Deacero S.A. de C.V., Deacero USA, Inc. v United States et al., Court Nos. 2015-1362, 2015-1363, 2015-1367, appellants appeal a judgment of the U.S. Court of International Trade (“Trade Court”) affirming the U.S. Department of Commerce’s (“Commerce”) remand determination on certain small-diameter steel wire rod. On October 1, 2002, the International Trade Commission (“ITC”) issued its final determination that a U.S. industry was materially injured by virtue of less-than fair-value imports of certain steel wire rod from Brazil, Canada, Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine. The “like product” subject to the investigation was “certain hot-rolled products of carbon steel and alloy steel, in coils, of approximately round cross section, 5.00 mm or more, but less than 19.00 mm, in solid cross-sectional diameter.”  Commerce instituted an anticircumvention inquiry on steel wire rod between 4.75 and 5.00 mm. Commerce determined that 4.75 to 5.00 mm steel wire rod was a minor alteration of the subject merchandise and that its import into the United States constituted an affirmative circumvention of the duty order. On appeal, the Trade Court concluded that Commerce erred in its minor alterations analysis and remanded to Commerce.

The Federal Circuit reversed the Trade Court’s decision holding that Commerce may expand the scope of the dumping order in order to combat circumvention of a particular order. Specifically, the Tariff Act identifies four articles that may fall within the scope of a duty order without unlawfully expanding the order’s reach: (1) merchandise completed or assembled in the United States with components produced in a foreign country subject to the duty order (19 U.S.C. § 1677j(a)); (2) merchandise completed or assembled in foreign countries using merchandise subject to a duty order (id. § 1677j(b)); (3) merchandise “altered in form or appearance in minor respects . . . whether or not included in the same tariff classification” (id. § 1677j(c)(1)); and (4) later-developed merchandise that would have been included in the order (id. § 1677j(d)).  The Federal Circuit held that while the duty order provides a cross-sectional range, it does not provide that steel wire rod less than 5.00 mm diameter should necessarily be excluded from its scope. For these reasons, the Federal Circuit reverse the Trade Court’s decision for remand and for finding 4.75 -5 mm rod excluded from scope of the order.