Trade Updates for Week of January 3, 2018

United States Court of International Trade


Affirming Commerce’s Determination in Hot-Rolled Steel Flat Products Case

 In Hyundai Steel Co. v. United States Slip Op. 17-173, Court No. 16-00238 (December 27, 2017)  the court reviewed Commerce’s determinations from a less-than-fair-value antidumping investigation of hot-rolled steel flat products from Korea. In August 2016 Commerce issued the results of the investigation finding a 9.49% antidumping margin. Hyundai challenged Commerce’s application of adverse facts available to Hyundai’s reported expenses with affiliated companies, and Commerce’s determination not to grant a constructed export price offset to the company because of trade differences in other markets. For the following reasons the Court upholds Commerce’s determinations in full.

The first issue was Commerce’s application of the adverse facts available to Hyundai’s expenses incurred with affiliated companies.  Moreover, the information provided by Hyundai was not enough for Commerce to complete an arm’s-length determination.  When information is not available on the record, or a respondent withholds information, or does not cooperate Commerce shall “use the facts otherwise available in reaching the applicable determination.” Id. at 5.  Commerce had requested contracts between Hyundai’s affiliates and all unaffiliated freight providers through supplemental questionnaires and at verification. Hyundai “did not furnish in entirety the documents requested by Commerce.” Id. at 16.  The Court found “Commerce’s resort to facts otherwise available … in order to complete its analysis was reasonable.”  Id. at 17.  The Court also found that it was reasonable for Commerce to expect Hyundai to access its affiliates’ documentation, and that the adverse facts available were lawfully applied. The final issue was Commerce’s determination not to grant a constructed export price offset to Hyundai. Constructed export price offsets are used by Commerce to account for different levels of trade in home markets and in the US market. Hyundai argued the determination was unsupported by evidence, and was arbitrary and capricious. The Court found that all of evidence on the record was enough for Commerce to determine the same level of trade existed in Hyundai’s home market and in the US, and that any minor differences did not require the need for a CEP offset. In addition, the Court found the determination was not arbitrary and capricious and that it was a reasonable for Commerce to deny the offset. 


Remanded Separate Rate Request Decision

In National Nail Corp. et. al. v. United States Slip. Op. 18-001, Court No. 16-00052, (January 2, 2018) the court reviewed Commerce’s determinations from the sixth annual review of the antidumping order on steel nails from China. Commerce determined that because the agency used adverse facts available in determining an antidumping margin, plaintiff National Nail Corp.’s  (“National Nail”) request for a separate rate from the China wide rate was denied. For the following reasons the court remanded the issue back to the agency for reconsideration. 

The primary issue was that because the agency used adverse facts available in regards to the factors of production, and sales and product specifications that plaintiff was not entitled to a separate rate from the PRC-wide rate of 118.04 percent. The determination to apply adverse facts available was resulted from Commerce’s findings that Shandong’s Section C and D nonmarket economy questionnaire (“Original Questionnaire”) responses regarding its affiliate Jining Dragon Fasteners’ product and U.S. sales of shooting nails were unreliable and incomplete.  However, these sections of the questionnaire had nothing to do with the information submitted in the separate rate responses. It was unfair to assume that because plaintiff did not provide the best information in one section they should suffer in another because of it. The Court said “the denial of a separate rate ... appears to be based on deficiencies in questionnaire responses unrelated to evidence dealing with whether or not Shandong was part of the PRC-wide entity.” Id. at 11. The request for a separate rate needed to be considered independently. The court remanded the case for Commerce to reconsider the separate rate request information independently from the other sections of the Original Questionnaire.


United States District Court  for the Northern District of Illinois


Customs Power of Attorney Not a Contract, But Does Create Fiduciary Relationship

 A Customs Power of Attorney is not a contract, but does create a fiduciary relationship and a duty to account for funds received, according to a new decision from the United States District Court for the Northern District of Illinois.

In Union Pacific Railroad Company v. Pactrans Air & Sea, Inc., et al., No 16-c-8092 (December 20, 2017), the railroad sued the defendants, a freight forwarding company and its owners, seeking the return of $5.8 million which Union Pacific had advanced to the forwarder, ,and which was supposed to be used to pay estimated antidumping and countervailing duties on imports of certain shipping containers. Pactrans, the defendant freight forwarder, was not itself a licensed Customs broker, but gave a power of attorney to a licensed broker to make entries of the containers on Union Pacific’s behalf.  Ultimately, the United States International Trade Commission made a negative determination of injury in the AD and CVD cases, and Customs was ordered to refund estimated duty deposits. Only then did Union Pacific learn that the defendants had not returned the duties, and indeed, had not forwarded much of the monies entrusted to them to the broker for payment of the duties. Pactrans, the defendant forwarder, claimed that it lacked the wherewithal to pay back the $5.8 million, having commingled the funds with its own and used the same for business expenses.

Magistrate Judge Sheila Finnegan, considering Union Pacific’s motions for summary judgment on various claims, first held that the Customs power of attorney issued to Pactrans created a “principal and agency” relationship, sufficient to create a fiduciary obligation from Pactrans to Union Pacific, notwithstanding that Pactrans was not itself a licensed Customs broker. “The mere fact that Pactrans subcontracted the licensed brokerage services out to Nissin [a licensed broker] in no way relieved it of its own obligation as Union Pacific’s agent to ensure that Nissin paid all necessary Customs Charges on Union Pacific’s behalf”, the court ruled.  The court also found that Pactrans had breached its fiduciary duty under the Customs POA, and that this was the proximate cause of Union Pacific’s damages.

The court also ruled that the monies which Union Pacific paid to Pactrans were sufficiently identifiable, based on available records, to support a claim for conversion against Pactrans.

However, the Court found that Union Pacific had not proven its claim of breach of contract, since it had not shown that the Customs power of attorney constituted a “contract. There was no offer, acceptance or supporting consideration.  The POA did not, by itself, constitute a contract.  The court also denied Union Pacific’s claim for monies had and received, noting that since Union Pacific had prevailed on its legal claim for breach of fiduciary duty, it was not entitled to also receive equitable relief.

The Court granted Union Pacific’s request for an accounting, but held that the company had not pleaded sufficient facts to grant it a piercing of the corporate veil, indicating that the company needed to prove this claim at trial.