Trade Updates for Week of January 2, 2019

United States Court of International Trade

Commerce Determination Remanded in Tapered Roller Bearings Case

Before the Court in Zhejiang Zhaofeng Mech. & Elec. Co. v. United States et. al., Slip Op. 18-182, Court No. 18-0004 (December 27, 2019) was Commerce’s determination that plaintiff was ineligible for separate rate status in the 2015–2016 administrative review of tapered roller bearings and parts from China. Prior to Commerce’s selection of plaintiff as a mandatory respondent, the company had submitted an application for an individual rate in the administrative review. Initially, Commerce wanted to apply an adverse facts available (“AFA”) rate against plaintiff for failing to provide a complete and accurate U.S. sales database. Commerce also stated that it found no evidence of Chinese government ownership, and determined plaintiff was otherwise entitled to a separate rate in the review. Ultimately, Commerce decided that plaintiff had failed to rebut the presumption that it is subject to government control and concluded plaintiff should be assessed at the China-wide entity rate.  For the following reasons, the Court remanded the determination for further consideration.

“An exporter will receive the country-wide rate by default unless it affirmatively demonstrates that it enjoys both de jure and de facto independence from the government.” Id. at 6. “Commerce may not disregard a respondent’s separate rate information as tainted just because there were deficiencies in the respondent’s sales or factors of production data.” Id. at 7. In this case, the Court said plaintiff’s “misrepresentations do not speak directly to Zhaofeng’s corporate structure or to the de facto control of the company, the misrepresentations cannot and should not be inferred to pervade the separate rate analysis.”  “Because the AFA analysis and separate rate analysis are distinct statutory evaluations, the two analyses cannot be conflated,” therefore Commerce’s determination was not in accordance with law. Id. at 9. In addition, the Court said the determination was not supported by substantial evidence because “Commerce did not adequately explain how this misconduct related to its separate rate analysis.” Id.