Trade Updates for Week of May 22, 2019

United States Court of International Trade

Court Sustained Commerce’s Determinations in Part and Remands in Part

Before the Court in Guizhou Tyre Co. Ltd. et. al. v. United States, Slip Op. 19-59, Court No. 18-00100 (May 15, 2019) was a challenge by plaintiffs to certain aspects of Commerce’s determinations in the 2015 administrative review of the countervailing duty order on off-the-road tires from China. Specifically, plaintiffs challenge: “(1) Commerce’s benchmark calculations to determine the extent of subsidies received by Guizhou; (2) Commerce’s application of adverse facts available (“AFA”) to the Export Buyer’s Credit Program; and (3) Commerce’s decision to countervail the Processing Trade Program. For the following reasons the Court sustained Commerce in part and remanded in part. 

In regards to the Export Buyer’s Credit Program issue, “Commerce may select from facts otherwise available when necessary information is not available in the record or when a party to a proceeding: (A) withholds information that is requested; (B) fails to provide such information in the form and manner requested; (C) significantly impedes a proceeding; or (D) provides information which cannot be verified.” Id. at 7. Both plaintiff and the Government of China (“GOC”) argued that none of plaintiffs’ customers benefited from the program, and this was shown through declarations and information provided that importers did not use the Credit Program. The Court said “because Commerce failed to explain what information the GOC has failed to provide and how that information was required for verification of the respondent’s claims” the determination was not supported by substantial evidence. Id. at 6. 

The next issue handled by the Court was the benchmark calculations. “Where available, Commerce prefers to compare prices to actual transactions in the country in question.” Id. at 12. “But if the market in that country is distorted by government involvement … the Department will then consider the prices paid in that country as not an appropriate basis of comparison and will instead look to world market prices.” Id. In this case, Commerce used a non-distorted benchmark on synthetic rubber. Plaintiffs argued Commerce’s benchmark on synthetic rubber was not supported by substantial evidence. The Court agreed saying “Commerce’s barebones explanation … leaves the parties with an arbitrary decision” regarding the benchmark, the issue was remanded Id. at 15. Plaintiffs then argued against the agency’s application of AFA in the benchmarks because of government controlled domestic suppliers failed to cooperate. The Court said “there is no indication—either in the record or briefed by the parties—that the Department’s AFA finding was not properly applied,” as such the determinations were upheld.

The final issue was Commerce’s decision to find that the Processing Trade Program provided countervailable subsidies. When “analyzing whether a program for exemption of import charges upon export results in a countervailable benefit, Commerce is to consider whether the government in question maintains controls adequate to ensure that any remission or exemption of import duties does not extend to duties on inputs not consumed in production for export.” Id. at 20. The Court said Commerce’s determination was reasonable because “the GOC failed to specifically explain or document how it determined the quantity of rubber, nylon cord or carbon black consumed in the production process.” Id. at 22.   Thus, Commerce’s decision in this instance was supported by substantial evidence.

Court Sustained ITC’s Affirmative Injury Determination

Before the Court in Arlanxeo USA LLC et. al. v. United States et. al., Slip Op. 19-60, Court No. 17-00247 (May 17, 2019)  was a challenge to U.S. International Trade Commission’s (“ITC”) final affirmative material injury determination in the antidumping duty investigation of emulsion styrene-butadiene rubber (“ESBR”) from Brazil, Mexico, the Republic of Korea, and Poland. The Court reviewed whether the ITC’s findings on the volume of subject imports, price effects, the impact of subject imports and that Poland was not a negligible source of subject imports were all supported by substantial evidence. For the following reasons the Court sustains the ITC in full.

Regarding the volume of imports, the Court said because the ITC considered market supply disruptions in its volume analysis and other conditions of competition such as the oversupply of ESBR in the global market,” the volume determination was supported by substantial evidence. The next issue the Court considered was the ITC’s price effect determinations. The ITC needs to consider whether “there has been significant price underselling by the imported merchandise as compared with the price of domestic like products of the United States, and the effect of imports of such merchandise.” Id. at 13.  The Court sustained the ITC’s determinations because they were made based “on evidence that the subject imports undersold the domestic like product in 150 of 218 quarterly price comparisons and 85.6 percent of the quantity of subject imports covered by the pricing data was sold during quarters in which the average price of these imports was less than that of the comparable domestic product.” Plaintiffs also raised a “swap” price argument because of a contract between Arlanxeo and Goodyear. The Court sustained the ITC, saying evidence showed the swap was the result of a negotiation between two unrelated companies. In regards to the price depression arguments, the ITC’s conclusions were sustained because of substantial evidence that indicated subject imports depressed the conversion fee.

The next issue before the Court was the ITC’s impact determination. The ITC “must consider the impact of subject imports on domestic producers of domestic like products, but only in the context of production operations within the United States.” Id. at 18. The Court said the ITC “adequately addressed the intra-industry competition and its analysis is supported by substantial evidence” Id. at 19. The final issue was the negligibility determination about Poland. “Imports are negligible if such imports account for less than 3 percent of the volume of all such merchandise imported into the United States in the most recent 12–month period for which data are available that precedes the filing of the petition.” Id. Plaintiffs argued the determination was wrong because some imports were misclassified. However, the court found “that the Commission’s negligibility determination is supported by substantial evidence because it included the misclassified ESBR.” Id. at 21.

Court Partially Grants Motion for Reconsideration

Before the Court in POSCO et. al.  v. United States et. al., Slip Op. 19-61, Court No. 17-00137 (May 20, 2019) was a motion by plaintiff for reconsideration of the court’s previous opinion. The Court had previously sustained Commerce’s determinations in the countervailing subsidy investigation of certain carbon and alloy steel cut-to length plate from Korea.  Plaintiff specifically requested for the court to reconsider its “affirmance of (1) Commerce’s application of the 1.05 percent adverse facts available (“AFA”) rate to POSCO M-Tech for unreported government subsidies received by Ricco Metal and Nine-Digit, both companies acquired by POSCO M-Tech; and (2) Commerce’s application of the 1.05 percent AFA rate to Hyundai and attribution of this rate to POSCO.” Id. at 2. In regards to the rate for unreported government subsidies, the court concluded Commerce did not make the requisite factual findings to proceed to the second step of its AFA analysis and remanded the issue. The Court continued to affirm the application of the AFA rate to Hyundai.