Trade Updates for Week of January 16, 2019

United States Court of International Trade

Remanded Decision in Part in Oil Country Tubular Goods Case

Before the Court in Nexteel Co. et. al. v. United States et. al., Slip Op. 19-01, Court No. 17-00091 (January 2, 2019) was the U.S. Department of Commerce’s final results in the 2014–2015 administrative review of the antidumping duty order of oil country tubular goods from Korea. The case was the first time that the Commerce found the existence of a particular market situation in an administrative review under The Trade Preferences Extension Act of 2015. The issue was just one of the numerous issues the court looked at in the case.

The 2015 Act allowed Commerce to find “the existence of a particular market situation such that the cost of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade, the administering authority may use another calculation methodology under this subtitle or any other calculation methodology.” Id. at 13-14. The Court said that Commerce failed “to substantiate its finding of one particular market situation with evidence on the record.” Id. at 15. The agency initially determined that no special market situation existed. Over the investigation, the agency “did not receive any new evidence regarding conditions in the Korean market.” Id. The Court held “Commerce did not explain adequately how the same record supported both its previous conclusion of no particular market situation and its subsequent finding of a single particular market situation.” Id. The Court remanded two additional issues for further consideration, including NEXTEEL’s input costs based a separate proceeding, and Commerce’s dumping margin calculation for non-examined companies. The remaining determinations by Commerce were found to be supported by substantial evidence.

Default Judgment Granted

Before the Court in United States v. Selecta Corp., LLC, Slip Op. 19-04, Court No. 11-00089 (January 11, 2019) was the plaintiff’s motion for a default judgment in an action brought to recover a civil penalty.  The Government sought “$51,102, plus post-judgment interest and costs, stemming from administrative penalty procedures conducted by Customs against defendant “for misclassifying and undervaluing imported merchandise on 1295 entries” of medical scrubs and lab coats Id. at 2. The Court granted the motion because the defendant “failed to respond in any way since the issuance of the penalty claim and throughout the pendency of this litigation before the court.” Id. at 4.           

           

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.

Trade Updates for Week of December 26, 2018

United States Court of International Trade

Remand Decision Sustained in Off-The-Road Tire Case

Before the Court in Qingdao Qihang Tyre Co. et. al. v. United States, Slip Op. 18-176, Court No. 16-00075 (December 19, 2018) were Commerce’s determination made on remand regarding the administrative review of an antidumping duty order on off-the-road tires from China. The Court previously remanded the results for Commerce to reconsider downward adjustments made to determine export price to account for Chinese irrecoverable VAT, the surrogate value for the reclaimed rubber manufacturing input based on Global Trade Atlas data from Thailand, and the surrogate value obtained from the World Bank’s Doing Business 2015 report for valuing foreign inland freight. For the following reasons, the Court sustained Commerce’s remand determination.

Commerce, under protest, recalculated export price without making downward adjustments for Chinese irrecoverable VAT. Commerce was required to address any “export tax, duty, or other charge imposed by the exporting country on the exportation of the subject merchandise to the United States.” The Court dismissed Commerce’s protest and sustained the determination because “the record in this case does not support the notion that China imposed an export tax, or anything resembling one, on the subject merchandise.” Id. at 7. Commerce also reconsidered its surrogate values and instead used Romanian import price data for reclaimed rubber, and the World Bank’s Doing Business 2016: Thailand report for inland freight. The Court sustained these determinations because the sources “constituted the best available information.” Id. at 8. 

Motion for Summary Judgment Granted in Plaintiff’s Favor

Before the Court in Arbed Americas, LLC v. United States, Slip Op. 18-177, Court No. 15-00095 (December 21, 2018) were cross motions for summary judgement regarding Customs denial of protest regarding the collection of antidumping (“ADD”) and countervailing (“CVD”) duties assessed on six entries of stainless steel plate coils from Belgium. The entries of steel in question were produced in Belgium and imported into the U.S. by plaintiff in 1999. In 2001, Commerce published an administrative reviews of ADD and CVD orders covering the period and products at issue. The reviews were challenged, but ultimately Commerce issued instructions to Customs to liquidate the concerned entries, including plaintiff’s entries. The application of this instruction was challenged in further litigation. However, the litigation only included 211 specific entries, none of which were plaintiff’s entries. A preliminary injunction was ordered by the Court of Appeals for the Federal Circuit (“CAFC”), and instructions issued to Commerce not to liquidate any of the 211 entries concerned.  Eventually, litigation ended and in January 2011 Customs attempted to liquidate the plaintiff’s entries and receive ADD and CVD payment. Plaintiff filed a protest arguing that under 19 U.S.C. § 1504(d) the six entries were deemed liquidated six months after August 31, 2006 when Customs received instructions that implemented the preliminary injunction ordered by the CAFC. For the following reasons, the Court agreed with plaintiffs that the entries had previously liquidated. 

“An entry must be liquidated within one year after the date the merchandise is entered for consumption unless the time for doing so is extended administratively or suspended by a statute or court order.” Id. at 6. “The Federal Circuit has held that in order for deemed liquidation to occur by operation of law, three elements must be met: “(1) the suspension of liquidation that was in place must have been removed; (2) Customs must have received notice of the removal of the suspension; and (3) Customs must not liquidate the entry at issue within six months of receiving such notice.” Id. at 7. The Court said that the instructions issued to Customs about the CAFC’s preliminary injunction was an “unambiguous and public notice to Customs … that suspension of the liquidation of Arbed’s six entries … orders had been removed.” Id. at 15. The Court dismissed the Government’s arguments regarding CBP’s ministerial role because a reasonable Customs official could not have read the instructions other than applying to the 221 entries specifically named in the instructions, none of which were plaintiff’s entries. The Court found that the entries were deemed liquated by operation of law on “September 13, 2006, when the 90-day period for petitioning the Supreme Court for certiorari from the Federal Circuit’s decision of June 15, 2006 expired.” Id. at 18.

 

Commerce Remand Determination Sustained in Part in Raw Garlic Case

Before the Court in Shenzhen Xinboda Indus. Co. et. al. v. United States et. al., Slip Op. 18-179, Court No. 16-0016 (December 26, 2018) was Commerce remand determinations regarding the final results in an administrative review of the antidumping duty order on fresh garlic from China. The Court had previously remanded for Commerce to reconsider the issue of surrogate country information and deferred consideration of Plaintiff’s additional challenges pending the results of Commerce’s remand redetermination.  For the following reasons, the Court sustains Commerce determinations regarding surrogate value for raw garlic and remands Commerce’s addition of delivery costs to the surrogate value for raw garlic and calculation of Plaintiff’s movement expenses.

“When an antidumping duty proceeding involves a nonmarket economy country, Commerce determines normal value by valuing the factors of production in a surrogate country.” Id. at 6. “In selecting surrogate values, Commerce must use the best available information that is, to the extent possible, from a market economy country or countries that are economically comparable to the nonmarket economy country and significant producers of comparable merchandise.” Id.  On remand, Commerce reopened the record and choose Romania as a surrogate as opposed to its previous surrogate Mexico. The Court sustained this determination because the Romanian data was “more contemporaneous than the annual data from Mexico” and the “Romanian data represented a broad market average,” which could not be said about Mexico. Id. at 9. By contrast, the Court disagreed with the surrogate values for movement expenses.  While calculating the cost of inland freight using the Romanian surrogate data, Commerce presumed a container payload weight of 10,000kg for the garlic. The Court said that this was unsupported by substantial evidence because there was no record evidence to support the payload weight. Only the weight issue was remanded for reconsideration.

Trade Updates for Week of December 19, 2018

United States Court of International Trade

Bonds Were Not Nullified as a Result of Pension Protection Act

Before the Court in Hartford Fire Insurance Co. v. United States, Slip Op. 18-172, Court No. 11-00135 (December 14, 2018) were cross motions for summary judgement regarding the denial of plaintiff’s protests of demands by U.S. Customs and Border Protection (“CBP”) for payment of antidumping duties on surety bonds. During the summer of 2006, Shandong Longtai Fruits and Vegetables Co., Ltd. was a new shipper of fresh garlic into the US, which was subject the antidumping order on fresh garlic. Shandong Longtai did not deposit cash to cover the estimated antidumping duties, but rather provided single entry bonds, for which Hartford was the surety. Customs calculated the final amount of antidumping duties owed by Shandong Longtai on the subject entries, and demanded that Shandong Longtai pay. Shandong Longtai failed to pay the final duties. Hartford paid as the surety and commenced this case to challenge Custom’s authority to demand the payment. For the following reasons, the defendant’s motion for summary judgment was granted by the Court.

Under 19 U.S.C. § 1675, Customs was authorized to allow, new shippers, the option of a bond or security in lieu of a cash deposit for each entry of the subject merchandise. However, the Pension Protection Act of 2006 (“PPA”), suspended the new shipper bonding privilege. The PPA said “the new shipper bonding privilege shall not be effective during the period beginning on April 1, 2006, and ending on June 30, 2009.” Id. at 5. Plaintiff argued that the bonds were nullified and unenforceable when the ability of Customs to accept bond had been removed.

Customs should have gone after Shandong Longtai for the amount. The Court disagreed with all of these arguments, saying “suspension of the new shipper bonding privilege was enacted largely as a result of the significant loss of revenue attributed to new shippers of merchandise subject to antidumping duty orders.” Id. at 9. Ultimately, plaintiff’s arguments about the PPA “would run contrary to Congressional intent and result in additional revenue loss for Customs.” Id. at 12.

Remand Determinations were Sustained in Crystalline Silicon Photovoltaic Cell Case

Before the Court in SolarWorld Americas, Inc. et. al. v.  United States et. al., Slip Op. 18-171, Court No. 16-00134 (December 13, 2018) was Commerce’s remand redeterminations regarding an antidumping review of crystalline silicon photovoltaic cells from China. The court had previously remanded Commerce’s surrogate value selection for mandatory respondent Yingli Green Energy Holding Co., Ltd.’s (“Yingli”) tempered glass and Changzhou Trina Solar Energy Co., Ltd.’s (“Trina”) scrapped solar cells. For the following reasons, the court sustains Commerce determinations from remand.

When a respondent is from a nonmarket economy (“NME”), such as China, Commerce must determine normal value based on the factors of production (“FOPs”) used to produce the merchandise. Commerce determines the FOPs based on the best available information considered to be appropriate. “Commerce’s methodology for selecting the best source is to choose a price that is (1) specific to the input; (2) tax and import duty exclusive; (3) contemporaneous with the period of review; (4) representative of a broad market average; and (5) publically available.” Id. at 13. On remand, Commerce reconsidered its decision to use Thai data as a surrogate for tempered glass, instead the agency opted to use Bulgarian import data.

The Court sustained the used of the Bulgarian data because “the data is specific to the input, tax and duty exclusive, contemporaneous, representative of a broad market average, and publically available.” Id. at 14. On remand, Commerce opted to value Trina’s scrap cells and modules using import data under Thai HTS 2804.69, which covers silicon of a purity less than 99.99 percent as opposed to the previous Thai HTS 8548.10. The Court said this decision was supported by substantial evidence as it responds to the court’s order in SolarWorld Americas II.

Trade Updates for Week of December 12, 2018

United States Court of International Trade

Raising Bond Requirement was found to be an Abuse of Discretion

Before the Court in Tabacos USA, Inc. v. United States, Court No. 18-00221 (December 7, 2018) was plaintiff’s challenge to Customs raising of the company’s entry bond amount from $300,000 to $400,000. The plaintiff’s business was at risk of shutting down because of the increase. In addition, plaintiff also provided evidence that the error that caused Customs to raise its bond requirement was “through no fault of the plaintiff.” Id. at 6. For the following reasons the Court entered judgment in favor of the plaintiff.

“The wisdom of an agency’s legitimate policy choices … should be respected … unless they are arbitrary, capricious, or manifestly contrary to statute.” Id. at 11. The court said it “cannot and therefore does not disregard the compelling evidence … that continuing plaintiff’s entry bond … in its current amount of $300,000 will not endanger the revenue of the United States.” Therefore, the bond requirement did not need to be raised. The Court also pointed out that despite the Court’s finding that that the demand to raise the requirement in this instance was in violation of 5 U.S.C. § 706 (2)(A), Custom’s bonding system and “methodology is a reasonable application of the discretion granted to it by statute and is not arbitrary, capricious or contrary to statute.” Id. at 12.

Trade Updates for Week of December 5, 2018

United States Court of International Trade

Negative Injury Determinations Made By the ITC Were Sustained

Before the Court in T.B. Wood’s Inc.  v. United States et. al., Slip Op. 18-164, Court No. 17-00022 (November 29, 2018) was plaintiffs challenge to the negative injury determination made by International Trade Commission (“ITC”) in an antidumping duty investigation of iron mechanical transfer drive components (“IMTDCs”) from Canada and China and a parallel countervailing duty investigation of these products from China. For the following reasons, the negative injury determinations were sustained. Plaintiffs challenged five aspects of the ITC’s determination: first, that the ITC failed to reconcile its conclusion that there was no correlation between subject imports and domestic industry performance with basic economic logic; second, that the ITC failed to explain adequately its conclusions regarding market share due to unreliable data; third, that the ITC failed to acknowledge a gap in the data it collected and unlawfully relied on the data without adjustment;  fourth, that the ITC’s price-effects analysis was unsupported by substantial evidence; and fifth,  that the ITC did not support or explain adequately its conclusions regarding the impact of subject imports on the domestic industry.

Where “a party seeks review of a final ITC determination … the court shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record.” Id. at 6. The Court rejected plaintiff’s economic logic argument because record evidence demonstrated “the volume of the subject imports did not show a sustained pattern of increasing significantly throughout the period of investigation (“POI”) and the share they occupied of the U.S. market remained relatively steady.” Id. at 14. In regards to the ITC’s determinations on market share, the Court said “because the ITC satisfactorily explained its methodology, the court cannot agree with plaintiff that the ITC acted contrary to law by failing to acknowledge the limits of its data.” Id. at 17. Plaintiff’s next argument on data also failed because “T.B. Wood’s has not shown that the Commission lacked necessary information, nor does it identify what information the ITC could have or should have used.” Id. at 18. The Court sustained the ITC’s determinations on price effect because “substantial record evidence supports the Commission’s finding of no clear trend in domestic pricing and … price depression.” Id. at 19. The Court found that the Commission’s negative finding was supported by substantial record evidence because the ITC could readily could see, through its collected data “that a number of changes in the indicia of the industry’s condition, including indicia on overall profitability, correlated temporally with changes in demand … but not with changes in the volume of cumulated subject imports.” Id. at 23.

Motion for Summary Judgment Denied

Before the Court in United States v. Greenlight Organic, Inc., Slip Op. 18-165, Court No. 17-00031 (November 29, 2018) was the defendant’s motion for summary judgment in an action by the United States Government for fraud in the course of importing merchandise into the United States. Greenlight argued the “Government’s action is time-barred by the five-year statute of limitations set forth in 19 U.S.C. § 1621 because the Government became aware of Greenlight’s fraudulent activities in 2011, more than five years before filing the summons and complaint in this case.” Id. at 1-2. For the following reasons the Court denied the defendant’s motion.

 “A statute of limitations requires a plaintiff to pursue diligent prosecution of known claims and promotes justice by preventing surprises through plaintiff’s revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.” Id. at 4. The language of 19 U.S.C. § 1621 “tolls the statute of limitations period until the date when the plaintiff first learns of the fraud.” Id. at 4. The Court said that “more facts are needed to ascertain when the Government first had knowledge of Greenlight’s fraudulent misclassification and undervaluation activities, including when the Government began to suspect a potential double invoicing scheme and when the Government had knowledge of an intent to defraud with respect to the misclassification of entries.” Id. at 5. Despite denying the motion for summary judgement, the Court noted the issue could be presented at trial. 

Remand Decision Sustained

Before the Court in Zhaoqing Tifo New Fibre Co. v. United States et. al., Slip Op. 18-168, Court No. 13-00044 (November 30, 2018) were Commerce’s determinations on remand regarding the administrative review of the antidumping duty order on polyester staple fiber from China. Plaintiff originally argued the dumping margin calculated by Commerce double counts certain energy costs because those costs are reflected in the surrogate financial ratios that Commerce used and then are counted again elsewhere in the agency’s calculations for the factors of production. The Court had previously remanded the issue to Commerce for reconsideration. On remand, Commerce, under protest to the Courts remand, excluded the costs of energy from the factors of production (“FOP”) database, to avoid double-counting energy expenses. For the following reasons Commerce’s results made under protest were sustained in full, and the agency’s arguments made regarding the protest were denied.

Commerce argued that instead of excluding energy cost from the FOP the agency should be allowed to choose another surrogate. The Court said “the selection of financial statements is … beyond the scope of this litigation … no party contends that Zhaoqing Tifo’s Complaint includes a claim challenging Commerce’s selection of financial statements.” Id. at 27. The Court said it was not within the power of Commerce to reconsider the choice of surrogate data in the case. In addition, the Court noted “Commerce elected not to reopen the administrative record to seek evidence that might have” clarified the manner in which surrogate financial statements account for energy and that ultimately the protest to the Court’s order was the agency’s own doing. Id. at 35.

 

Trade Updates for Week of November 28, 2018

United States Court of International Trade

18-161

Before the Court in Northern Tool and Equipment Company, Inc. v. United States, Slip Op. 18-161, Court No. 14-00146 (November 23, 2018) were cross motions for judgment in an action based on Customs’ denial of a protest contesting the amount of antidumping duties owed on hand trucks imported from China. In a 2004 antidumping order, Commerce had instructed Customs (“CBP”) to require cash deposits for hand trucks produced or exported by Taifa, a Chinese manufacturer equal to the specific weighted-average antidumping duty margin of 26.49 percent. This rate was different than the China wide rate calculated during the review.  Plaintiff imported hand trucks from China through the use of numerous different companies and ultimately identified Taifa as the manufacturer. However, CBP found Taifa was the producer of the goods but that another company, ITI, was the exporter of the hand trucks. As such, antidumping duties at the China-wide entity rate were assessed on Northern Tool’s entries. For the following reasons the Court sustained CBP’s determinations in full.

Northern Tool argued this case concerned the denial of its protest by CBP and jurisdiction was proper under 28 U.S.C. §1581(a). The Government argued the Court lacks jurisdiction because CBP’s actions were merely ministerial. The Court found there was jurisdiction “to review whether CBP correctly applied Commerce’s liquidation instructions with respect to Northern Tool’s entries.” Id. at 7. The Court said that it “does not perceive clear error in CBP’s analysis and consideration of the commercial documents that support its finding.” Id. at 8. The Court said, that ultimately jurisdiction did not lie over what Northern Tool was seeking, to establish that ITI was not the exporter and that the relevant entries should not be subject to the China-wide entity rate. The “ultimate decision of which instruction applied to a particular circumstance rested with Commerce,” who was not part of this case. Id. at 9.

 

 18-162

Before the Court in New Mexico Garlic Growers Coalition et. al. v. United States et. al., Slip Op. 18-162, Court No. 17-00146 (November 26, 2018) was Commerce’s final results and partial rescission of the 21st administrative review of the antidumping duty order on fresh garlic from China. During the review, Commerce selected two Chinese companies to be mandatory respondents, QTF and Harmoni, based on a request received by the agency including one from the New Mexico Garlic Growers Coalition (“NMGGC“). Commerce initially applied the adverse facts available (“AFA”) to both companies for failing to cooperate and for making misrepresentations in the investigation. In the final results, Commerce dropped Harmoni as a respondent because the request against the company was illegitimate. Commerce determined that some of the six companies with which QTF was affiliated were part of the China-wide entity and, therefore, denied QTF a separate rate, finding that it was part of the PRC-wide entity and subject to the China-wide rate. For the following reasons Commerce’s determinations were sustained in full.

“In antidumping duty proceedings involving a nonmarket economy country … Commerce presumes all respondents are government-controlled and therefore subject to a single country-wide rate.” Id. at 8.  “A respondent may rebut that presumption and obtain a separate antidumping duty rate by demonstrating the absence of … government control over its export activities. Id. The Court sustained Commerce’s determinations that QTF was not entitled to a separate rate because “Commerce properly determined that QTF’s misrepresentations rendered the entirety of its submissions unreliable when the information it withheld included the identity of its affiliates, at least some of which are part of the PRC-wide entity.” Id. at 24. The Court also sustained Commerce’s decisions to apply the AFA against QTF and to collapse QTF with affiliated entities.

The antidumping statue is silent on the rescission of request for reviews. However, Commerce’s regulations provide that the rescission of a review is allowed within 90 days of the date of publication or if reasonable to do so. Commerce initially certified the review request from NMGGC but elected to rescind the request after allegations of fraud arose against the NMGGC’s attorney. NMGGC argued that because the statute was silent, the review could not be rescinded. The Court found that Commerce’s regulations were valid because “Commerce’s interpretation of a review … is a reasonable interpretation of the statute.” Id. at 39.  The Court also found Commerce’s factual findings and credibility determinations regarding the fraud were supported by substantial evidence because Commerce cited email exchanges, and detailed information on the record.

Trade Updates for Week of November 21, 2018

United States Court of International Trade

Motion to Dismiss Granted in Countervailing Duty Order on Tires

Before the Court in Zhongce Rubber Group Company Limited v. United States, Slip Op. 18-160, Court No. 18-00082 (November 20, 2018) was defendant’s motion to dismiss. Plaintiff brought this action to contest the application of adverse facts available by Commerce in calculating the rate applied to Zhongce during an administrative review of the countervailing duty order on tires from China. Defendant moved to dismiss because plaintiff had not exhausted administrative remedies before commencing the action. For the following reasons the Court dismissed the case.

28 U.S.C. § 2637(d) “provides that the court shall, where appropriate, require the exhaustion of administrative remedies.” Id. at 3. “Exhaustion allows agencies to apply their expertise, rectify administrative mistakes, and compile records adequate for judicial review.” Id. at 4. “In this case, Zhongce failed to submit a case brief challenging Commerce’s preliminary results, and instead waited to challenge Commerce’s decision before this court.” Id. at 5. The Court found that plaintiff failed to exhaust administrative remedies because of the failure to submit a case brief for Commerce to review. The Court also found exceptions to the rule did not apply because the appropriate administrative remedies would not have been futile efforts and the pure law exception did not apply where there were factual questions at issue.

Trade Updates for Week of November 14, 2018

United States Court of International Trade

Motion to Dismiss Granted

Before the Court in U.S. Auto Parts Network, Inc. v. United States et. al., Slip Op. 18-154, Court No. 18-00068 (November 8, 2018) was defendant’s motion to dismiss the case. Plaintiff challenged the Government’s imposition of a $9 million entry bond requirement, well in excess of the plaintiff’s $200,000 worth of annual imports, for violating U.S. trademark laws. The Court had previously issued a preliminary injunction for plaintiff. For the following reasons the Court dismissed the case.

 “A claim is non-justiciable if it is moot, which occurs when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.” Id. at 3. In this case, the Court found plaintiffs’ claims were moot because the “Port of Norfolk had released all containers to U.S. Auto” and because “U.S. Auto represented also that the company stopped importing goods through the Port of Norfolk.” Id. at 3. The Court also said plaintiffs failed the meet the ripeness doctrine “because there is no final agency action for the court to review.” Id. at 4. Plaintiff’s now “speculative set of facts do not present a justiciable controversy.” Id. at 4.

 

Commerce’s Determination in regards to Carbon and Alloy Steel Wire Remanded in Part

Before the Court in Deacero S.A.P.I de C.V. et. al. v. United States et. al., Slip Op. 18-155, Court No. 17-00183 (November 8, 2018) were challenges to Commerce’s determinations in the administrative review of carbon and certain alloy steel wire rod from Mexico. Commerce used the total facts available to apply an adverse inference to calculate Deacero’s final dumping margin. This resulted in Commerce selecting the highest rate alleged in the 2001 petition, 40.52%, as Deacero’s AFA rate and final dumping margin. For the following reasons the Court sustains the agency’s determination to apply total facts available with an adverse inference but remands Commerce’s selection of 40.52% as the AFA rate for further explanation.

“Commerce shall use facts otherwise available to reach its final determination when necessary information is not available on the record, a party withholds information that has been requested by Commerce, fails to provide the information timely or in the manner requested, significantly impedes a proceeding, or provides information Commerce is unable to verify.” Id. at 6. In this case, the Court held that Commerce was correct in applying adverse facts because “Deacero impeded Commerce’s review when it made changes to its cost dataset, misrepresented the effects of those changes, and did not provide supporting record evidence to explain the changes.” Id. at 7. Under a similar analysis the Court also upheld the application of adverse inferences because “Deacero did not act to the best of its ability to cooperate with Commerce’s requests for information.” Id. at 15. However, the Court did remand the 40.52% rate from the complaint because the rate was reached under an “analysis that was undertaken in 2001 without placing on the record any of the relevant documents.” Id. at 18.

 

Commerce’s Determination in Crystalline Silicon Photovoltaic Products Review Remanded in Part

Before the Court in SolarWorld Americas, Inc. et. al. v. United States et. al., Slip Op. 18-158, Court No. 17-00208 (November 13, 2018) were Commerce’s determinations in an administrative review of the antidumping duty order on crystalline silicon photovoltaic products from Taiwan. The court reviewed whether Commerce properly adjusted respondent, Motech, per-unit costs when it declined to apply partial adverse facts available; whether Commerce properly adjusted respondent, SAS, reported costs for different grades of merchandise when it declined to apply partial adverse facts available; and whether Commerce properly determined that all merchandise shipped by SAS during the period of review were United States sales. For the following reasons the Court sustained in part and remanded in part.

 “In order to calculate the dumping duty, Commerce compares the foreign market value, the normal value, of the product to the United States price, the export price.” Id. at 6. “Commerce’s practice in evaluating costs for non-prime merchandise is to determine if that merchandise can be used in the same applications as prime merchandise.” Id. at 7. In this case, the Court sustained Commerce’s action regarding Motech’s per unit cost because Commerce relied on Motech’s explanation of the companies grades in its questionnaire response. The Court also sustained the cost adjustment for SAS because it was reasonable for Commerce to reduce the costs of certain grade photovoltaic products based on evidence on the record that the grade could not be used for the same applications as prime merchandise. In addition, the Court sustained Commerce’s decision not to apply adverse facts to respondents because both “complied fully with Commerce’s requests.” Id. at 11. In regards to the United States sales of SAS’s merchandise, the Court remanded the issue to Commerce “because evidence on the record establishes sales to customers in Mexico and demonstrates that the merchandise was shipped to United States FTZ addresses” to be forwarded to Mexican customers. Id. at 13.

 

Trade Updates for Week of November 7, 2018

United States Court of International Trade

ITC Decision on Truck and Bus Tires Remanded in Part

Before the Court in United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union et. al. v. United States et. al., Slip Op. 18-151, Court No. 17-00078 (November 1, 2018) was plaintiffs’ challenge to the International Trade Commission’s (“ITC”) final negative material injury determination in the antidumping and countervailing duty investigations of truck and bus tires from China. Plaintiffs argued that the ITC’s findings on the conditions of competition, negative findings on adverse price effects, adverse impact, and threat determination were not supported by substantial evidence. For the following reasons the Court sustains the ITC on three of the issues, and remands one issue to the ITC for redetermination.

“The possibility of drawing two inconsistent conclusions from the evidence does not prevent the court from holding that the Commission’s determinations, findings, or conclusions are supported by substantial evidence.” Id. The Court said the ITC’s determinations on competition, that there was a high degree of substitutability among tires, three product tiers, and the importance of other major factors then price as a buying decision were all supported by substantial evidence because the ITC properly relied on the agency’s questionnaire responses in making the decisions. The Court also said the ITC’s negative adverse impact decisions was based on substantial evidence because “plaintiff’s assertions are an impermissible reweighing of the evidence.” Id. at 14. However, the Court did find the ITC’s determinations regarding negative adverse price effect were not supported by substantial evidence because the ITC “did not reference any statistics, and neglected to explain how its observation supported its conclusion.” Id. at 11. The Court declined to analyze the negative threat determination until after the remand regarding adverse price effect was conducted.

Decision on Certain Frozen Fish Fillets from Vietnam Remanded in Regards to NME and Vietnam Wide Rate

Before the Court in Thuan An Production Trading and Service Co., Ltd. et. al. v. United States et. al., Slip Op. 18-152, Court No. 17-00056 (November 5, 2018) were plaintiffs’ challenges to Commerce’s determination in the 12th annual review of the antidumping duty order covering certain frozen fish fillets from Vietnam. Plaintiffs challenged the asserted legal grounds which Commerce used to determine a non-market economy (“NME”) dumping rate for Vietnam, Commerce’s assignment of the $2.39 Vietnam wide rate to plaintiff, and Commerce requiring plaintiff to report its factors of production (“FOP”) on a CONNUM-specific basis. For the following reasons the Court sustains Commerce’s determination on the FOP reporting, but remands the issues involving the NME and Vietnam wide rate to Commerce for reconsideration.

“19 U.S.C § 1673d instructs that Commerce may establish two kinds of rates, … for each exporter and producer individually investigated and determine . . . the estimated all-others rate for all exporters and producers not individually investigated.” Id. at 9. The Court said here that the rate Commerce established was not one of the statutorily authorized rates because Commerce itself calls the established rate “a single country-wide rate … a rate that is not an individual rate or an all-others rate.” Id. at 12. The Court also found the assignment of the $2.39 rate not to be valid because NME rate itself was not authorized. The final issue was requiring the plaintiff to report its FOP on a CONNUM specific basis. Plaintiffs argued that Commerce failed to advise them of the CONNUM basis for reporting and that it was impossible to provide the information. However, the Court found Commerce’s decision to be valid because the agency had used the CONNUM data for other reviews of this antidumping order and notified producers of their intent to use the data before starting previous reviews.

Trade Updates for Week of October 31, 2018

United States Court of International Trade

 

Commerce’s Decision Remanded in Welded Line Pipe Case

Before the Court in Tosçelik Profil ve Sac Endustrisi A.Ş. et. al. v. United States et. al., Slip Op. 18-148, Court No. 15-00339 (October 24, 2018) were remand determinations from Commerce in the antidumping investigation of welded line pipe from Korea and Turkey. At issue in this case is the amount of which Commerce must increase the export price of goods from Turkey because of duty drawback received national companies. Specifically, the refunds received from companies through Turkish Government’s Inward Processing Regime which allows for import duty exemptions through certificates is under review. Commerce determined that all eligible claims must have been closed during the period of investigation at a specific date, which the plaintiffs do not agree with. For the reasons that follow, the court remands this matter to Commerce to recalculate plaintiffs’ duty drawback adjustment.

“Neither the duty drawback statute nor the legislative history provides guidance on the methodology to be used … in the absence of such guidance, Commerce may develop reasonable methodologies to fill gaps.” Id. at 7. The Court said the issue was to be reviewed as a “substantial evidence issue in which the court evaluates the reasonableness of Commerce’s POI limitation given the administrative record.” Id. at 7-8. Commerce’s main reason for denying the claim was because the agency claimed it was general practice to only examine costs and expenses during the POI. However, as the Court observed this could not be supported by substantial evidence because “Commerce collected and verified information on all” of claims submitted by Plaintiffs, regardless of whether the claims closed within the POI or not. Id. at 6. Commerce also argued impracticability in reviewing the data, an argument the Court also said could not be supported by substantial evidence because the agency reviewed and verified all of the claims regardless of whether they were in the POI. The agency’s final argument was that certain claims could get double counted, an argument dismissed by the Court by saying claims “simply cannot be double-counted.” Id. at 10. According to the Court, “Commerce’s imposition of the POI limitation in this matter unreasonably undercuts its stated goals of accuracy, transparency, and predictability by ignoring verified record information,” and that the only thing left to do was to calculate Plaintiffs’ duty drawback adjustments consistent with that verified information. Id. at 11.

Trade Updates for Week of October 24, 2018

United States Court of International Trade

Court Orders Enforcement of Judgment in Antidumping Matter

Before the Court in United States Steel Corp. et. al. v. United States et. al,. Slip Op. 18-139, Court No. 14-00263 (October 17, 2018) was plaintiff’s motion to enforce a judgment previously issued by the Court. In previous litigation, the Court ordered the Commerce Department to adjust the rates of two foreign respondents who had been assigned the “all others” rate. Commerce issued new rates for the respondents but did not recalculate the “all others rate.” Plaintiff requested that all other rate be recalculated according to the new respondent rates. The government refused to do so arguing it had carried out the Court’s order.  The plaintiffs argued that Commerce had failed to recalculate the “all others rate” as in previous cases. The Court granted the plaintiff’s request and ordered Commerce to issue a revised Timken notice either reconsidering or further explaining its determination.   The Court noted:

“Agency action becomes an established practice when a uniform and established procedure exists that would lead a party, in the absence of notification of change, reasonably to expect adherence to the agency’s past action.” Id. at 8.The Court held it was Commerce’s prior practice to recalculate the “all others rate” when respondent rates are changed because the agency had done so numerous times, and had even stated in agency decisions it was Commerce’s practice. In addition the Court said “where Commerce deviates from its practice, it has two options. First, Commerce may explain why it is reasonable under the circumstances to deviate from that practice. Second, Commerce may announce a change to its practice, unless the party in the instant case can be shown to have detrimentally relied on such practice.” Id. at 17. As such, the issue was remanded back to Commerce for a further reconsideration.     

Scope Determination on Strike Pins Remanded to Commerce.

Before the Court in Midwest Fastener Corp. v. United States et. al, Slip Op. 18-142, Court No. 17-00231 (October 19, 2018) was Commerce’s  determination that certain “strike pins” were within the scope of the antidumping duty (“ADD”) order covering steel nails from China. Commerce determined the strike pins were unambiguously subject to the scope of the orders on steel nails. Plaintiff’s argued Commerce’s decision was not supported by substantial evidence. The Court remanded the issue to Commerce for further reconsideration, holding:

“Scope orders may be interpreted as including subject merchandise only if they contain language that specifically includes the subject merchandise or may be reasonably interpreted to include it.” Id. at 6. The scope of the ADD order covered “nails . . . constructed of two or more pieces (i) includes multi-component products where one component is a nail, and the other non-nail components aid the functioning of the nail, and (ii) that here, the threaded body, washer and nut components merely aid the functioning of the nail component.”

Commerce considered the strike pin as a unitary object consisting of four components, one of which was a nail, therefore the agency found the object was within the scope of the ADD order.  However, the Court said Commerce had failed to produce evidence that “other components of the strike pin anchor merely aid the functioning of the pin” and that the agency needed to clarify the meaning of the phrase “constructed of two or more pieces”. Id. at 10. The issue was remanded for further clarification.

Court Denies Motion to Stay Judgment on Endangered Species

In National Resources Defense Council et. al. v. Wilbur Ross et. al., Slip Op. 18-143, Court No. 18-00055 (October 22, 2018), the court declined to stay its judgment requiring the United States to exclude certain Mexican fish harvested in a manner which engendered the vaquita, a small porpoise species in danger of extinction.  The Court had previously ordered the government to enforce the Marine Mammal Protection Act (“MMPA”) and ban the importation of fish caught with gillnets that also catch and endanger the vaquita, and issued a preliminary injunction to that effect. The Government motioned for a stay of the preliminary injunction pending appeal, alleging that the Court made several legal errors, but the Court declined to grant one.

“A stay pending appeal is not a matter of right, even if irreparable injury might otherwise result, and the party seeking the stay bears the burden of showing that the circumstances justify an exercise of the court’s discretion.” Id. at 6. The defendant’s arguments in support of the stay are that the Court made an error by issuing the injunction and the Government is suffering serious harm as a result of the injunction. The Court strongly stated no legal errors had been committed because the government “by failing to ban the fish imports as required by the MMPA, the Government unlawfully withheld agency action under § 706(1) of the Administrative Procedure Act.” Id. at 7.

The Court also strongly stated that it did not abuse its discretion when weighing the plaintiffs harm against the governments.  The Court said that “the declarations attached to the Government’s motion to stay provide no better evidence of a concrete rather than speculative injury” and that “the public interest is best served when the Government complies with the law, namely the preservation of marine mammal populations, such as the vaquita here.” Id. at 8.

 

Informal Consultations Insufficient to Discharge Discovery Obligations.

Before the Court in United States v. Great Neck Saw Manufacturers Inc., Slip Op. 18-144, Court No. 17-00049 (October 22, 2018) was the plaintiff’s motion to compel discovery responses from the defendant in a penalty litigation. On April 6, 2018 the government served defendant with numerous discovery requests with responses due on May 10th. Defendant requested an extension to May 25th, because of the large number of entries involved. GNSM failed to provide any responses by the deadline without explanation. Despite communication back and forth between the parties the issue was never resolved. On July 10th the defendant produced documentation to the plaintiff that the Government did not believe came close to fulfilling the defendant’s obligation, and the motion to compel was filed. Defendant argued it was impossible to fulfill the Government’s discovery request. The Court denied the motion to compel without prejudice.

Judge Leo Gordon indicated that, during discovery parties must make “an effort to determine precisely what the requesting party is actually seeking; what responsive documents or information the discovering party is reasonably capable of producing; and what specific, genuine objections or other issues, if any, cannot be resolved.” Id. at 6. The Court said “plaintiff’s description of its efforts to confer failed to provide the court with a sense of whether the parties reasonably engaged in deliberations, conversations, a comparison of views, or consultations with an eye to resolving the dispute prior to involving the court” because the plaintiffs email conversations with the defendant were “minimal in length.” Id. at 6-7. Because of this, the Court could not compel the discovery.  In order to assist in the litigation process the Court ordered the parties to confer and to make an effort to resolve the dispute. The Court left the option open for further motions to be filed at that time.

Trade Updates for Week of October 17, 2018

United States Court of International Trade

Commerce’s Decision Sustained in Differential Pricing Analysis Case

Before the Court in Stanley Works (Langfang) Fastening Co., Ltd. et. al. v. United States Slip Op. 18-135, Court No. 16-00053 (October 10, 2018) were plaintiff’s challenge to Commerce’s determinations in an antidumping duty order covering steel nails from China.

Plaintiff argued Commerce unlawfully rejected Stanley’s original case brief, and the final results were not made in accordance with the governing statute or Commerce’s regulations. For the following reasons the Court sustains Commerce’s results.

In order to remand the case back to Commerce, the Court must find Stanley was substantially prejudiced by Commerce’s rejection of the brief. The Court said Stanley could not have been substantially prejudiced because all arguments made in the brief were considered by the Court in a separate case involving the same issue, which Stanley lost. Moreover, the materials Stanley hoped to put on the record were closer to being part of its legal argument than factual information as defined in 19 C.F.R. § 351.102(b)(2) . Stanley was never denied an opportunity to makes its arguments and therefore was not substantially prejudiced by Commerce’s rejection. For the same reasons cited by the Court previously in Stanley’s lost case,

Slip Op. 18-99, the Court found Commerce’s differential pricing analysis was a reasonable interpretation of the statute and upheld Commerce in full.

Duty Drawback: CIT Orders Final Regulations Issued

The United States Court of International Trade has directed the government to publish, no later than December 17, 2018, duty drawback regulations implementing key provisions of the Trade Facilitation and Trade Enforcement Act of 2015.

In Tabacos de Wilson v. United States, Slip Op. 18-138 (October 12, 2018), the Court issued a judgment order to implement its earlier decision that Treasury had “unlawfully withheld agency action” by failing to issue regulations providing formulas for the calculation of drawback under the new rules set out in TFTEA. Since that time, Customs on August 2, 2018 issued a Notice of Proposed Rulemaking which would create a whole new part of the Customs Regulations for TFTEA drawback. The agency solicited public comments on the proposed regulations through September 17, 2018, with nearly 100 major stakeholders providing comment. The government had represented to the CIT that it could complete the massive rulemaking package before February 2019, the end of the TFTEA drawback “transition year”, but the Court seemed unconvinced.

The Court’s new order directs Customs to publish its drawback regulations in final form by December 17, 2018, and to make them effective on that date. This, the Court indicated, would give drawback claimants at least part of the “transition year” to make informed decisions on how to file drawback claims. But the order gives Customs an important “out”; the agency may delay issuance of any final regulations other than a small group which the plaintiffs had identified as essential to determining how to calculate TFTEA drawback claims.

The ball is now in the Government’s court. As of this writing, the government has not indicated whether it will try to implement its entire regulatory package by December 17. That package contains a number of controversial measures – such as those involving drawback of Federal Excise Taxes – which, if the rules are enacted, could prompt additional litigation.

The Tabacos decision is the latest in a saga which began back in February, 2018, when the Treasury Department bypassed a Congressional deadline for issuing regulations concerning how duty drawbacks should be calculated under TFTEA. Drawback claimants who had been promised a “transition year” in which they could claim drawback either under historical rules or TFTEA rules were at a loss concerning how they should structure and file duty drawback claims.

In lieu of regulations, Customs and Border Protection issued an Interim Guidance Document setting out “guidelines” for calculating TFTEA drawback – guidelines which were changeable at will and which would govern the drawback program until Customs could complete and finalize regulations regarding drawback under TFTEA.

Moreover, Customs indicated that it would not issue accelerated payments of drawback for TFTEA claims until final regulations were adopted. Mindful that CBP’s last major set of drawback regulations had taken nearly five (5) years to be finalized, and facing financial losses, a group of drawback claimants and drawback service providers brought suit, seeking to force Treasury to issue the calculation regulations which Congress had directed be in place by February 2018.

On June 29, 2018, the United States Court of International Trade ruled for the drawback claimants, holding that Treasury had “unlawfully withheld” required agency action, and that, under the Administrative Procedure Act, the Court was required to “compel agency action unlawfully withheld”. Tabacos de Wilson et al. v. United States, Slip Op. 18-81 (June 29, 2018).

Now the court has determined the scope of the action to be taken.

Trade Updates for Week of October 10, 2018

United States Court of International Trade

 

Commerce’s Decision Sustained in Less than Fair Value Sales Determination

Before the Court in Dong-A Steel Company et. al. v United States et. al. Slip Op. 18-134, Court No. 16-00201 (October 3, 2018) was the affirmative less than fair value sales determination in the antidumping investigation of heavy walled rectangular welded pipes from Korea. Plaintiffs, the largest importers of subject merchandise, challenged Commerce’s determination on six grounds. These were, the decision to use the earlier of the invoice date or the shipment date as the date of sale, the decision to assign full costs to non-prime merchandise, the decision to adjust plaintiff’s reported input costs for merchandise that was identical except for paint, the decision to compare merchandise on a theoretical weight basis, the decision to deny a constructed export price offset, and the decision to use the zeroing methodology. For the following reasons the Court sustained Commerce’s determination in full.

“In identifying the date of sale … Commerce normally will use the date of invoice.” Id. at 9. However, “Commerce may use a date other than the date of invoice if … a different date better reflects the date on which the exporter or producer establishes the material terms of sale.” Id. The Court believed that Commerce had correctly applied the standard by applying the later of the dates and that plaintiffs had failed to establish that another proposed date was a better reflection of the establishment of a sale.  The next issue was if Commerce’s decision to assign full costs to non-prime merchandise was supported by substantial evidence. “Commerce seeks to determine whether it is possible to use the non-prime merchandise in the same applications as the prime merchandise.” Id. The Court said there was substantial evidence to support Commerce’s decision because customers could use plaintiff’s “prime and non-prime products in any applications for which they consider the products suitable.”  Id. at 18.

The next issue was the adjustment of reported input costs for products that were identical except for paint. In determining cost, “an agency may either accept financial records … or reject the records if accepting them would distort the company’s true costs.” Id. at 21. The Court said Commerce’s adjustment was supported by substantial evidence because the agency “found that the significant cost differences between the two product control numbers could not be explained by the physical characteristic of one being painted and the other not painted” leading to distorted cost. Id. at 22.  The next issue was whether Commerce erred in deciding to compare merchandise weight on a theoretical basis, based on a standard industry formula. The court concluded that Commerce’s choice to use theoretical weight was reasonable and based upon substantial evidence on the record because “utilizing theoretical weight would not decrease any distortions in the calculation compared to actual weight.” Id. at 27. 

The next issue was if Commerce erred in deciding to deny a constructed export price (“CEP”) offset for plaintiffs. Commerce will grant a CEP offset when “normal value is established at a level of trade which constitutes a more advanced stage of distribution than the level of trade of the CEP, but the data available do not provide an appropriate basis to determine . . . a level of trade adjustment.” Id. at 28.  The Court said Commerce’s decision was supported by substantial evidence because the agency determined plaintiff did not qualify because there was only one home market level of trade. The final issue, was whether Commerce erred in deciding to use the zeroing methodology in its differential pricing analysis. Plaintiff’s argued “Commerce’s use of zeroing is not in accordance with the law because it violates the WTO Antidumping Agreement.” However, the Court sustained Commerce because “The WTO’s adverse ruling regarding the practice of zeroing has not been implemented into U.S. law, thus Commerce has no obligation to refrain from using zeroing in this case.” Id. at 33.

 

Sustained Remand Decisions in Nails Case

Before the Court in Stanley Works (Langfang) Fastening Co., Ltd. et. al. v. United States et. al., Slip Op. 18-134, Court No. 11-00102 (October 5, 2018) were Commerce’s final redeterminations in the agency’s first administrative review of an antidumping duty covering steel nails from China. Plaintiffs challenged Commerce’s inclusion of surrogate financial data from Indian company Sundram. Specifically, Commerce did not use the company as a surrogate initially in the first review, but reconsidered its approach in the second annual review. After determining in the second review Sundram was an appropriate surrogate, the agency then applied it as a surrogate in the first review and removed one of the initial surrogates used, J&K. This raised plaintiff’s duty margins from 10.63% to 15.43%. After extensive litigation two issues remained before the Court, whether Commerce reasonably included Sundram’s financial ratios in the calculation of Stanley’s dumping margin and whether Commerce’s decision to apply the revised 15.43 percent rate to the entries not associated with Stanley was contrary to law. For the following reasons Commerce’s determinations are sustained by the Court.

When selecting surrogate data Commerce should “avoid using any prices which it has reason to believe or suspect may be dumped or subsidized.” Id. at 9. Commerce’s decision was supported by substantial evidence because Sundram’s financial statement plainly states that it “has not received any grant from the Government.” Id. at 10.” In regards to the application of the 15.43% rate, the Court said “it is Commerce’s normal practice to assign non-investigated separate rate respondents a rate based on the average of the margins calculated for those companies selected for individual review.” Id. at 16. The Court pointed out that defendant intervenors could have participated in previous litigation to contest the all other rate applied to them, and that because Stanley had started its own litigation, injunctions against the rate in separate litigation were not applicable.

Trade Updates for Week of October 3, 2018

United States Court of International Trade

 

Commerce Decision Remanded to Apply Averaged Zero Rate

Before the Court in Heze Huayi Chemical Co. Ltd. v. United States et. al., Slip Op. 18-130, Court No. 15-00027 (September 28, 2018) was a challenge to the final results of Commerce’s administrative review of the antidumping order on chlorinated isocyanurates (“chlorinated isos”) from China. Plaintiffs are the third largest producer of chlorinated isos in China, but were not chosen to be mandatory respondents nor selected as voluntary respondents because of a late submissions to Commerce. As a result, plaintiff was assigned a 53.15% anti-dumping rate, while respondents all received de minimis rates of zero percent. During the course of this case, precedent had come down from the Court of Appeals for the Federal Circuit (“CAFC”) that held “Commerce should average the zero or de minimus rates of mandatory respondents in determining the rates of non-examined parties.” Id. at 4. For the following reasons the Court remands for Commerce to apply respondent’s averaged zero rate to plaintiff.

The CAFC “found Commerce’s practice of disregarding zero or de minimus mandatory respondent rates when determining the rates of non-respondents to be inconsistent with the Uruguay Round Agreements Act.” Id. at 5. The CAFC also made clear that there were some circumstances where deviation from this method may be reasonable. These were when there is evidence that the dumping margins have not changed from period to period and when Commerce is using the adverse facts available. The Court found that neither scenario was present here remanded the case for further proceedings consistent with the CAFC precedent.

 

Commerce Remanded Results on Scope Remanded

Before the Court in Agilent Technologies v. United States et. al., Slip Op. 18-131, Court No. 16-00183 (October 1, 2018) were scope determinations made by Commerce holding that plaintiff’s mass filter radiator was subject to antidumping (“ADD”) and countervailing duty (“CVD”) orders on aluminum extrusions from China. The plaintiff is a manufacturer of electronic and bio-analytical measurement instruments. Both the ADD and CVD orders excluded finished heat sinks from the scope of the order. Plaintiff argued its mass filter radiators were finished heat sinks, and therefore excluded. However, Commerce found they fell under the scope of their orders and were not subject to the exclusions, therefore subject to the duties. For the following reasons the Court remanded the scope ruling back to the agency for further consideration.

Antidumping and countervailing duty orders “may be interpreted as including subject merchandise only if they contain language that specifically includes the subject merchandise or may be reasonably interpreted to include it.” Id. at 6. The first step is to examine “the scope of the Order to determine if that language is ambiguous and open to interpretation.” Id. at 7. If the order is open to interpretation, Commerce may then turn to examine the (k)(1) factors. These are “the descriptions of the merchandise contained in the petition, the initial investigation, and other determinations of Commerce, and the U.S. International Trade Commission” for clarification. Id. In this case, Commerce argued “Agilent’s mass filter radiator does not meet the definition of a finished heat sink because it was not designed and produced to meet specified thermal performance requirements and was not tested for compliance with specified design requirements.” Id. In reaching its determination, Commerce relied on a previous scope ruling regarding ECCO light bars. The Court said this reliance was unreasonable because the light bar issue supported “an analysis of specific facts to determine whether physical design” could establish the existence of specified thermal performance requirements. Id. at 12. In this case, the Court said what was needed was for specific determination of how “the physical elements lead to specified thermal performance requirements.” Id. Commerce’s determination lacked “substantial evidence that Agilent did not meet the specified thermal performance requirement of the finished heat sink exclusion.” Id. at 13.

 

Remand Required for Scope Determination Regarding Zinc and Nylon Anchors

Before the Court in Midwest Fastener Corp. v. United States et. al., Slip. Op. 18-132, Court No. 17-00131 (October 1, 2018) was another “iteration of litigation centering on whether a product is classified as a nail.” Id. at 1. Plaintiff challenged Commerce’s determination that its imported zinc and nylon anchors fall within the scope of the antidumping orders on steel nails from Vietnam. Midwest describes its zinc and nylon anchors as “a zinc or nylon body, and a steel pin.” Id. at 7. For the following reasons the Court remanded the issue to Commerce for further reconsideration.

“The language of the order determines the scope of an antidumping duty order,” any scope ruling begins with an examination of the language of the order at issue. Id. at 3. If the terms of the order are unambiguous, then those terms govern. If the terms of the order are either ambiguous or reasonably subject to interpretation, then the (k)(1) factors will need to be taken into account. These are the descriptions of the merchandise contained in the petition, the initial investigation, and prior determinations of Commerce and the International Trade Commission. The Court used dictionary definitions to define a nail as “a slim, usually pointed object used as a fastener for impact insertion.” Id. at 11. The Court said zinc and nylon anchors did not fit in the unambiguous common description of a nail. The scope ruling was remanded for further reconsideration consistent with the Court’s opinion.

Trade Updates for Week of September 26, 2018

United States Court of International Trade

 

Untimely GSP Claim; Case Dismissed

Before the Court in Industrial Chemicals, Inc. v. United States, Slip Op. 18-126, Court No. 17-00117 (September 24, 2018) was the Government’s motion to dismiss the plaintiff’s claim for lack of subject jurisdiction. Plaintiff claims that sixty-five entries of chemicals from India, imported between August and October of 2014, are eligible for duty free treatment under the Generalized System of Preferences (“GSP”). GSP expired in July of 2013, and was reauthorized by Congress in June of 2015. The reauthorization included a provision allowing for retroactive duty refunds on eligible goods within a 180 day limit. Plaintiff submitted a letter after the 180- day time limit to Customs requesting a refund. Customs returned the letter with a handwritten note saying they could not process the claims because the claim was untimely. Plaintiff then submitted a protest which was denied and bought this case. “The question of jurisdiction turns on whether Plaintiff challenges a protestable decision made by Customs.” Id. at 5. The Court said the protest was invalid “because it was not filed within 180 days of liquidation” because of this “the court does not have jurisdiction over the invalid protest.”  In addition, the Court also said “Customs' refusal to issue the refund, as indicated in the handwritten note, was not a protestable decision.” Id.  Defendant’s motion to dismiss was granted in full.

  

Motion to Dismiss Granted in Steel Nails Case

Before the Court in National Nail Corp. v United States et. al., Slip Op. 18-125, Court No. 18-00053 (September 24, 2018) was Plaintiff’s challenge to Commerce’s final results in the first administrative review of the antidumping order on steel nails from Taiwan. Plaintiff, National Nail, was not party to any of the underlying administrative proceedings conducted by Commerce. Defendant claims because of this the Court lacks jurisdiction.  The plaintiff brought the claim under (i) jurisdiction which is a “residual grant of jurisdiction, and it may not be invoked when jurisdiction under another subsection” was available. Id. at 6. “It is well-settled that (i) jurisdiction is generally unavailable when (c) jurisdiction could have been available,” unless the party is “able to demonstrate that the remedy afforded by (c) jurisdiction would be manifestly inadequate Id. at 8. In this case the Court held, that (c) jurisdiction would have been available to the plaintiff had they participated in the administrative proceedings. In addition, the Court found the financial harm alleged was not a manifestly inadequate remedy based on Federal Circuit precedent. The defendant’s motion to dismiss was granted in full.

  

Scope Determination Regarding Zinc and Nylon Anchors Remanded

Before the Court in Simpson Strong-Tie Company v. United States, Slip. Op. 18-123, Court No. 17-00057 (September 21, 2018) was “another installment in the continuing mystery series, Is It Classified as a Nail?” Id. at 1. Specifically, plaintiffs challenged Commerce’s determination that imported zinc and nylon anchors fall within the scope of the Antidumping Orders on Steel Nails from China. Simpson argued its anchors are not steel nails and therefore, do not fall within the scope of the Orders and that Commerce’s scope determination is unsupported by substantial evidence. For the following reasons the Court finds Commerce’s determination was not in accordance with law.

“The terms of an order govern its scope,” and “if the scope of an order is not ambiguous, the plain meaning of the language governs.” Id. at 9. “Antidumping duty orders “should not be interpreted in a vacuum devoid of any consideration of the way the language of the order is used in the relevant industry.” Id. The Court said a nail, which would fall in the scope of the order, is defined in the dictionary as “a small metal spike with a sharpened end and a blunt head, which may be driven in to a surface with a hammer or other tool in order to fasten things together” and therefore the definition of a nail was unambiguous.  Id. at 10. Simpson descried its merchandise “as zinc or nylon with a shell or body, and a carbon and stainless steel pin.  Based on these definitions the Court said “Simpson’s anchors are not inserted by impact into the materials to be fastened and do not grip by friction in the same manner as a nail.” Id. at 11. Since, the anchors were outside the scope of the order, Commerce’s determinations were remanded for further reconsideration.

 

Reinforcing Bar Determination Sustained

Before the Court in Rebar Trade Action Coalition v United States, Slip Op, 18-122, Court No. 17-00157 (September 20, 2018) were Commerce’s determinations in the first administrative review of the 2014 countervailing duty (“CVD”) order on steel concrete reinforcing bar from Turkey. The coalition challenges Commerce’s findings that the Government of Turkey (“GOT”) did not purchase electricity for more than adequate remuneration, that actual energy purchases were not a countervailable benefit, and that a zero percent margin was applicable to non-selected respondents. For the following reasons Commerce’s determinations were sustained in full. 

The court shall sustain “Commerce’s determinations, findings, or conclusions unless they are unsupported by substantial evidence on the record, or otherwise not in accordance with law.” Id. at 2. Commerce found in its investigation of the electricity market in Turkey that the GOT “administers the system through which the market prices are determined,” and that the GOT “can neither make losses nor earn profits from its activities and does not have cash flow, other than the collection of transmission fees and system utilization charges.” Id. at 5.  The Court said Commerce’s determination was supported by substantial evidence because the agency reasonably certified that GOT did not pay for or set the prices for electricity through questionnaire responses and research. The Court dismissed the coalition’s other arguments regarding the purchasing of electricity saying the plaintiffs had failed to establish direct evidence of payments for electricity. The next issue was Commerce’s determination the purchase of electricity by government affiliated entities under the GOT consumer program was not a subsidy. The Court said the determination was supported by evidence because the record contained proof that the price of electricity was not set by the government but rather were “priced pursuant to contracts negotiated by the public” along with the GOT. Id. at 14-45. Zero percent rates for non-selected respondents, was upheld by the Court because all of Commerce’s other determinations were sustained.

Trade Updates for Week of September 19, 2018

United States Court of International Trade

 

Sustained Results in Frozen Fish Filets from Vietnam

Before the Court in An Giang Fisheries Import and Export Joint Stock Company et. al. v. United States et. al., Slip Op. 18-118, Court No. 16-00072 (September 12, 2018) were Commerce’s remand redeterminations in the eleventh antidumping administrative review of certain frozen fish filets from Vietnam. The Court had previously reviewed Commerce’s determinations and sustained the use of the adverse facts available (“AFA”) against respondents in the investigation. However, the Court did remand Commerce’s determination regarding the agency’s “decision to adjust the denominator and not the numerator when calculating Hung Vuong Group’s (“HGV”) farming factors of production” for explanation. Id. at 2. On remand, Commerce explained that the agency “first divided the farming FOP numerators … by the reported production quantity of harvested whole live fish.” Id.at 7. “Commerce then multiplied the resulting farming FOPs by the shank equivalent conversion factor so they would be on the same basis as the U.S. price.” Id. The Court sustained the results holding Commerce complied with the remand requirements.

 

Trial Ordered in Ziploc Plastic Bags Case

Before the Court in S.C. Johnson & Son, Inc. v. United States, Slip Op. 18-118, Court No. 14-00184 (September 14, 2018) were cross motions for summary judgment with respect to the proper tariff classification of Ziploc plastic bags. Plaintiff argued the Ziploc bags were properly classified under HTSUS Subheading 3924.90.56, which covers: Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics, with an applicable duty rate of 3.4% ad valorem. This heading was eligible for duty free entry under the Generalized-System of Preferences (“GSP”). Customs argued the merchandise was properly classifiable under HTSUS Subheading 3923.21.00, which covers: Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics. This heading was not eligible for duty free treatment under GSP. For the following reasons the Court denies the motions for summary judgment.

“The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (“GRIs”) … applied in numerical order.” Id. at 6. GRI 1 instructs that, “for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes … construed according to their common and popular meaning.” Id.  Plaintiffs argued that SGI, Inc. v. United States, 122 F.3d 1468 (Fed. Cir. 1997) required the bags to be classified as “various household containers for food.” Id. at 11. However, the Court said this case was different because the precedent focused on the six digit tariff classification while this case still compared classifications at the four digit level.  However, the Court did conclude “HTSUS Heading 3924 is an eo nomine provision that encompasses plastic goods of or relating to the house or household.”  The Court did not consider the issue further because “genuine issues of material fact remain unresolved” regarding the bags’ principal use. The court will hold a trial on these issues.

 

Upheld Remand Results in Xantham Gum Case

Before the Court in CP Kelco US, Inc. v. United States et. al, Slip Op. 18-120, Court No. 13-00288 (September 17, 2018) were Commerce’s determinations on the fourth remand of the final results of the antidumping investigation of xanthan gum from China.  The Court had previously remanded to investigation results numerous times for Commerce to explain the agency’s rejection of a specific Thai company as a surrogate. On this remand, Commerce used the rejected data in order to calculate dumping duties for respondents. The antidumping duty rate dropped from 8.69 percent to 0 percent. The Court said the remand determinations were in accordance with the Court’s previous orders and upheld the results.

Trade Updates for Week of September 12, 2018

United States Court of International Trade

 

 

New Shipper Review Should Not Have Been Rescinded for Insufficient Information

The court in Jinxiang Huameng Imp & Exp Co., Ltd. and CS Farming Products, Inc., v. United States, Court No. 16-243, Slip Op. 18-116 (September 10, 2018) reviewed whether Plaintiff Jinxiang Huamgeng Imp & Exp Co., Ltd. (“Huameng”) was not bona fide was supported by substantial evidence. Huameng is an exporter and producer of fresh garlic who applied for a New Shipper Review based on a single sale of single-clove garlic that it produced and exported.

Commerce may rescind a new shipper review (1) if there has not been an entry and sale to an unaffiliated customer in the United States of the subject merchandise during the period of review, and (2) an “expansion of the normal period of review to include an entry and sale to an unaffiliated customer in the United States of subject merchandise would be likely to prevent the completion of the review within the [required] time limits.”  See 19 CFR 351.214(f)(2). Commerce interprets the term sale in section 351.214(f)(2) to mean that a transaction it determines not to be bona fide, is not a sale under the regulation.  Here, Commerce rescinded the new shipper review because Huameng did not provide information regarding contractual payments for the goods or for payment of freight and duties. However, the Court held the review should not have rescinded the review and that Commerce should have decided using facts available to fill any gaps in the record. For this reason the Commerce’s decision to rescind the new shipper review was remanded.

 

Drawback Refund Claims were Untimely and Incomplete

Before the Court in Flint Hill Resources, LP. et. al. v. United States, Slip. Op. 18-110, Court No. 06-00065 (September 6, 2018) were cross motions for summary judgment regarding Customs denial of plaintiff’s drawback refunds on Harbor Maintenance Taxes (“HMT”), Merchandise Processing Fees (“MPF”), and Environmental Taxes (“ET”). When plaintiffs imported their product in the U.S. “an importer could receive a refund of up to 99 percent of the amount paid on any duty, tax, or fee imposed under federal law “because of its importation” into the United States.” Id. at 3-4. Court precedent had found that HMT, MPF, and ET were ineligible under the drawback statute for refund. In response, Congress changed the law to make the fees eligible for drawback in 2004. After the change in legislation, numerous cases were filed to claim drawback on past entries. The Federal Circuit ruled the three year deadline included in 19 U.S.C. § 1313(r)(1) was applicable and the claims were time barred. Plaintiffs filed timely protest for the drawback of duty refunds paid on imports between 1998 and 2002, but not for other fees. After liquidation of previous the claims, plaintiffs filed protest seeking drawback refund of taxes and fees. Plaintiffs challenged the denial of these protest in this action. For the following reasons the Court sustained Customs denial of the protest, and found in favor of defendant’s summary judgment motion. 

“In order for Customs to grant a drawback claim, the claim must be complete.” Id. at 13. A complete claim includes providing notice to Customs that an importer is seeking a refund of HMT, MPF, and ET and a correct calculation of any taxes and fees sought within the three year time limit. In regards to plaintiffs’ drawback claims in this case, the Court said “plaintiffs here failed to put Customs on notice that they were seeking drawback of taxes and fees within the statutory timeframe.” Id. at 17. The Court also said plaintiffs had not provided a correct calculation in their initial drawback request by “merely setting forth a claim for drawback of import duties.” Id. at 20-21. Plaintiffs also argued the statute of limitations regarding plaintiffs’ claims did not begin until after the 2004 legislation was passed by Congress, that enactment of the legislation was a violation of separation of powers, and the defendant was responsible for the delays and the statute of limitation should be waived. The Court was unpersuaded by any of these arguments and found plaintiffs’ claims to be untimely.

 

Commerce Decision Regarding Hot Rolled Steel Products Remanded in Part

Before the Court in both POSCO et. al. v. United States et. al., Slip Op 18-115, Court No. 16-00225 (September 10, 2018) (Case #1) & POSCO et. al. v. United States et. al., Slip Op. 18-117, Court No. 16-00227 (September 11, 2018) (Case #2) were determinations made by Commerce in the countervailing duty (“CVD”) investigation of hot-rolled steel flat products from Korea. Commerce had chosen to apply the adverse facts available (“AFA”) against POSCO for failure to truthfully respond to Commerce regarding its cross owned companies, to report a facility owned in a free trade zone, and for failure to report any affiliated company loans. Commerce applied the same AFA as have been applied in previous CVD investigations involving Korea. Commerce also found that Government of Korea’s provision of electricity did not benefit POSCO and was not countervailable. POSCO challenges several issues regarding Commerce’s application of the AFA. For the following reasons the Court sustained Commerce in part and remanded in part in one case, and sustained the remand decision in the other.

In Case #1, the first issue the Court dealt with was whether the AFA should be applied at all to POSCO. Plaintiff argued Commerce’s decision to apply AFA is improper because POSCO did not fail to cooperate and it acted to the best of its abilities by sending corrections to Commerce. However, the Court pointed out POSCO had violated Commerce’s deadline by not submitting the corrections 30 days before a preliminary determination was issued. Instead the corrections were submitted after a preliminary determination was issued, therefore Commerce’s decision to apply AFA was reasonable. Plaintiff’s next argument regarding the AFA was that Commerce violated 19 U.S.C. § 1677e(d)(2) by “defaulting” to the highest rate and needed to evaluate the facts and circumstances that led to the application of the highest rate. The Court said “the statute allows Commerce to select the highest rate, but only after Commerce examines the circumstances that led to the application of AFA” and because “Commerce did not provide any such explanation in this investigation,” the issue would be remanded Id. at 19. In Case #1, the Court also sustained all of Commerce’s decisions finding electricity from the Korean Government a non-countervailable subsidy.  

In Case #2, determinations on remand regarding similar issues were before the Court. The Court said “On remand, Commerce explained, with citations to supporting evidence, why this case did not merit a deviation from the highest calculated rate selected pursuant to Commerce’s hierarchical methodology,” and the results were sustained.  Case #2 at 8.

 

Court Sustained Commerce’s New Antidumping China Wide Rate on Glycine

Before the Court in both Evonik Rexim (Nanning) Pharmaceutical Co. Ltd. et. al. v United States, Slip Op. 18-112, Court No. 17-00132 (September 7, 2018) and Pharm-RX Chemical Corporation v. United States, Slip Op. 18-113, Court No. 17-00268 (September 7, 2018) were Commerce’s determinations in administrative reviews of antidumping duties on glycine from China in 2010-11 and 2013-14. In both cases plaintiffs challenged the China-wide entity rate of 453.79 percent. In separate litigation the China wide rate was challenged, and Commerce calculated a new 155.89 percent dumping rate. Both plaintiffs did not challenge the new rate, as a result the Court sustained Commerce’s determination.

Trade Updates for Week of September 6, 2018

United States Court of International Trade

 

These Dolls are Not Festive Articles

Before the Court in Russ Berrie & Company, Inc. v. United States, Slip Op. 18-108, Court No. 93-00391 (August 30, 2018) were cross motions for summary judgement regarding the proper tariff classification nine different types of products imported and liquidated in 1993. Plaintiff, an importer of various goods, argued that all of the goods were classifiable under HTSUS subheading 9505.90.60, as festive objects with a duty rate of 3.1% ad valorem. The Government argued the merchandise was not festive and was classifiable under various HTSUS subheadings. For the following reasons the Court agreed with the government in regards to the classification of all products, except one which was classified as a festive article.

“Tariff classification under the HTSUS is determined according to the General Rules of Interpretation (“GRIs”) … the GRIs are applied in numerical order.” Id. at 6. GRI 1 provides that “classification shall be determined according to the terms of the headings and any relative section or chapter notes” construed according to their common and commercial meanings.   Some of the many articles the Court dealt with were toy trolls, goblin finger puppets, grim weeper figurines and Christmas Hug figurines. The trolls were dressed with Christmas outfits, the finger puppets and Christmas figurines were Halloween and Christmas themed, and the grim weeper figurine depicted the figure holding a scythe. The Court said the trolls, finger puppets, and figurines “have the amusing physical characteristics of toys, are not decorations or ornaments. Whether or not they are dressed in outfits with” or related to Christmas or Halloween themes.” Id. at 16. The correct subheading for the dolls, finger puppets and hugs was HTSUS subheading 9503.49.00, as toys with a 6.8% ad valorem duty rate.   The Court also used the same reasoning to classify a bobble head like model of a skeleton popping up from a head stone under HTSUS subheading 9503.90.70, as a toy with a spring with a 6.8 % ad valorem duty rate.

The next product at issue was the Trick ‘n Treat Fun Center. The center was a set that consisted of five articles: multiplying viewers, puzzle watches, squirt balls, paint palettes, and stencil sets. A threshold issue regarding this product was if it should be classified as a set. The Court declined to do this because the plaintiffs catalog described the product as individual articles which “may be sold separately at retail.” Id. at 31. The Court individually classified the multiplying viewers, puzzle watches, and stencil set under HTSUS Subheading 9503.90.60 as toys, using the same analysis as was used on the dolls, finger puppets and figurines. These were dutiable at 6.8% ad valorem. Under a similar analysis the paint pallet was classified under heading 3213 as a paint set for children’s use. The squirt balls, which can shoot water, were classifiable under subheading 9505.90.20 as festive practical joke articles, with a duty rate of 5.8% ad valorem.

Plaintiff also claimed that various candleholders were classifiable as festive articles. The candleholders had numerous designs including a pilgrim, a Santa Claus teddy bear, and angel’s wings. After evaluation the different possible classifications the Court said “goods that are holiday-themed decorations but also are lamps, if of a non-durable construction, fall within the scope of heading 9505, HTSUS, while such decorations of more durable construction (such as the candleholders at issue in this case) generally do not and remain classified under heading 9405, HTSUS.” Id. at 44.  The applicable HTSUS Subheading for the candleholders was 9405.50.40. In addition, plaintiff claimed that baby booties were classifiable as festive articles because the baby shoes each depict either a Halloween, Christmas, or Thanksgiving face. The Court found the shoes classifiable under HTSUS subheading 6405.20.90 as other footwear with a 12.5% duty rate ad valorem

The only product plaintiff’s festive article claims were successful on was its etched image plaques. The plaque depicts an Easter lily, a white dove and a gold chalice, and includes the words “The Lord is risen, alleluja!” The Court said “The Easter lilies, the gold chalice …, and the message referencing the resurrection of Jesus Christ are symbolic of the Easter holiday” therefore classification under HTSUS 9505.90.60 as a festive was correct. Id. at 47.

 

Motion for Preliminary Injunction and Motion to Strike were Both Denied

The Court in Sumecht NA, Inc. d.b.a., Sumec North America v. United States et. al., Slip Op. 18-109 (August 30, 2018) considered plaintiff’s motion for a preliminary injunction and motion to strike certain citations and claims made by the defendant in its reply brief to the motion for a preliminary injunction. Plaintiffs are importers of photovoltaic cells from China, who “initiated this case to contest certain administrative and enforcement actions taken by the U.S. Department of Commerce.” Id. at 2. For the following reasons the plaintiff’s motion for a preliminary injunction and motion to strike were both denied.

“A motion to strike constitutes an extraordinary remedy, and should be granted only in cases where there has been a flagrant disregard of the rules of court.” Id. at 4. The Court said plaintiff “has not made a sufficient showing to warrant granting the extraordinary remedy it seeks” because they could not prove bad faith or prejudice by the Government.  Id. at 5.  For purposes of the preliminary injunction, the Court considers four factors. These are “(1) whether the party is likely to suffer irreparable harm in the absence of such injunction; (2) whether the party is likely to succeed on the merits of the action; (3) whether the balance of hardships favors the imposition of the injunction; and (4) whether the injunction is in the public interest.” The Court said “Sumec does not specify any concrete, individualized harm, and does not proffer further evidence in support of its allegations. Plaintiff’s perceived financial harm is hypothetical and unsubstantiated.” Id. at 6. The Court choose not to consider the other factors due to plaintiff’s failure to establish irreparable harm.

Trade Updates for Week of August 29, 2018

United States Court of International Trade

 

No Certification for Trade Adjustment Assistance for Displaced Bank Workers

Before the Court in Former Employees of Fifth Third Bank v. United States Secretary of Labor, Slip Op. 18-106, Court No. 17-00258, was the Department of Labor’s remand determination “denying certification to Plaintiffs as a class of workers entitled to Trade Adjustment Assistance (“TAA”).” Id. at 1. On January 4, 2017, the State of Florida filed a petition for Trade Adjustment Assistance on behalf of certain workers of Fifth Third Bank, Global Financial Institutions (“Fifth Third GFI”), a wholly owned subsidiary of Fifth Third Bancorp (“Fifth Third”), Coral Gables, Florida. The workers, who were engaged in “International Correspondent Banking services,” identified the displacement of U.S. banks by non-U.S. banks in the correspondent banking market as the reason for their separation from Fifth Third GFI.

Labor previously denied certification to plaintiffs for failing to meet the threshold number of required employees for certification. The Court ordered Labor to reconsider this determination. In its redetermination, Labor found the threshold employee number was met, but denied certification on the grounds “the workers’ firm, customer, and aggregate U.S. imports of services like or directly competitive with global transaction services supplied by Fifth Third GTB did not increase during the relevant period.” Id. at 5.  Labor motioned, with the consent of plaintiff, for a voluntary remand to further investigate the application. “If the agency’s request is frivolous or in bad faith, a remand may be denied. However, if the agency’s concern is substantial and legitimate, a remand is usually appropriate.” Id at 6. The court found “the agency’s request is neither frivolous nor in bad faith” because “Labor intends to conduct additional investigation to determine whether plaintiffs are eligible for TAA certification and issue an appropriate redetermination.”  Id. at 7. As such, the Court agreed to the voluntary remand.

 

Remand Results Sustained where Exporter of Pencils was State-Owned

Before the Court in Shandong Rongxin Import & Export Co., Ltd. v. United States et. al., Slip Op. 18-107, Court No. 15-00151 was Commerce’s remand determinations regarding whether plaintiff was subject to Chinese Government control and therefore subject to country wide rate of  the antidumping investigation regarding cased pencils.  On remand, Commerce determined plaintiff, Shandong Rongxin Import & Export Co., Ltd. (“Rongxin”), an exporter of pencils from the People’s Republic of China (“PRC” or “China”) was under the control of the Chinese government because the government owned a majority of the company’s shares and had as significant influence in company management.  For the following reasons the Court sustains Commerce’s determinations in full.

“The absence of de facto government control can be shown by evidence that the exporter: (1) sets its prices independently of the government and of other exporters, (2) negotiates its own contracts, (3) selects its management autonomously, and (4) keeps the proceeds of its sales,” the company must establish each of the four factors to rebut the presumption of government control. Id. at 4. Commerce’s position that the de facto control analysis element of the overall separate rate determination requires satisfaction of all four factors is likewise reasonable and entitled to deference from this Court. Commerce had determined the plaintiff was not independent of the Government because the company’s majority is owned by Shandong International Trade Group (“SITG”), who is wholly owned by State-Owned Assets Supervision and Administration Commission (“SASAC”), a state supported agency of the Chinese Government.  The Court said this analysis and conclusion were both lawful and supported by substantial evidence and because plaintiff had failed to establish one of the four elements Commerce was not required to further consider the other elements.

 

United States District Court for the District of Connecticut

 

State Unfair Trade Remedies Not Available for NAFTA Issues

A state unfair trade practices law is not available to addressed claimed NAFTA violations, according to a recent decision from the United States District Court for the District of Connecticut.

Wind Corporation v. Wesko Locks, Ltd., No. 3: 18-cv-292 (D. Conn) was a lawsuit brought by a Connecticut distributor of furniture hardware (Wind) against a Canadian competitor (Wesko) under the broadly-couched Connecticut Unfair Trade Practices Act (CUTPA). Wind alleged that Wesko had improperly claimed NAFTA-originating treatment for certain furniture locks. As a result, Wind claimed, Wesko was able to sell locks for less than it otherwise would have, constituting an unfair trade practice in violation of CUTPA.

The case was based on the questionable proposition that an increase in Customs duty costs (or any other costs) automatically had to be passed on to Connecticut consumers, or an unfair trade practice would result.

CUTPA applies to unfair acts in “trade or commerce”. It does not apply when the conduct in question is the subject of comprehensive substantive and procedural regulation by a State or Federal agency.  Wesko moved to dismiss the suit, claiming (1) that the filing of tax returns (including Customs entries) was not an activity in “trade or commerce” and (2) that NAFTA issues were already comprehensively regulated through the Customs laws.

The court granted Wesko’s Motion to Dismiss the case. It disagreed with Wesko that the acts complained of were not in the scope of “trade and commerce”, viewing the unfair act not as the filing of Customs entries, but rather as marketing locks whose provenance had not been correctly represented. But the Court agreed with Wesko that issues relating to import duties, including claims for NAFTA treatment, were already comprehensively regulated by the Federal government under the Customs laws.  In addition to reviewing the myriad of Custom laws which deal with entry, assessment of duties, penalties and claims for recovery of withheld duties, the Court noted that Section 337 of the Tariff Act [19 U.S.C. §1337] prohibits “unfair practices in import trade”.

The Court concluded that:

Thus, it appears that the process by which persons import foreign-made products into the United States is provided for by statute and that it is regulated expressly by a “pervasive statutory scheme” that “carefully balances both the procedural and substantive remedies.” City of Danbury, 249 Conn. at 20. Moreover, as in Connelly, “holding that a CUTPA remedy, lacking the procedural prerequisites and specifically tailored remedies” provided for under the Tariff Act of 1930, governs unlawful conduct relating to the import of foreign-manufactured goods would upset the carefully crafted equilibrium between the competing interests of the various people and entities involved in the importation of foreign-made goods into the United States.

Thus, a party aggrieved by a competitor’s import practices will generally need to look to the Federal Customs laws for its remedy.