United States Court of International Trade

Court Sustained Remand Results in Part

In Shandong Rongxin Import & Export Co., Ltd.  v. United States and Dixon Ticonderoga, Court No. 15-151, Slip Op. 17-11 (February 3, 2017), the Court remanded in part Commerce’s remand decision in the case of dumped pencils.  Plaintiff, Shandong Rongxin Import & Export Co., Ltd. (“Rongxin”), an exporter of pencils from the People’s Republic of China (“PRC”) brought this action against Defendant, the United States disputing certain aspects of the final administrative review results issued by the U.S. Department of Commerce in Certain Cased Pencils from the People’s Republic of China, 80 Fed. Reg. 26,897 (Dep’t Commerce May 11, 2015) (final results of antidumping duty administrative review, 2012–2013) (“Final Results”).   In Shandong Rongxin Import & Export Co., Ltd., v. United States, 40 CIT ____, ____, 163 F. Supp. 3d 1249, 1254–55 (2016) (“Remand Order”), the court remanded this case for further explanation or reconsideration as may be appropriate with regard to the issue of whether Dixon is an interested party with standing to request an administrative review of Rongxin. The court declined to reach the issue of whether Rongxin deserved a separate rate until the threshold issue of standing was resolved.

First, the Court sustained Commerce’s decision to reopen the record on remand and find that Dixon Ticonderoga Company (“Dixon”) was an interested party, as a domestic producer, who manufactured pencils during the period of review (POR). Commerce found Dixon’s work orders and production documents to be credible evidence that Dixon produced pencils in Macon, Georgia during the POR. Thus, there was substantial evidence to support these findings.

Second, the Court sustained Commerce’s findings that Shandong International Trade Group (“SITG”), a state owned enterprise, owned a majority of Rongxin, and that the board is elected by a majority of its shareholders.  Thus, SITG could affect Rongxin’s export decisions.

Third, however, the Court remanded Commerce’s decision to deny a separate rate for Rongxin when it did not review all four factors in determining whether there was de facto government control of Rongxin.  Commerce had already conceded that de jure government control was absent.  Factors in determining de facto government control include: (1) whether the export prices are set by, or are subject to government approval; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether respondent retains the proceeds of its export sales.   Based on a new formula, and precedent in Advanced Technology & Materials Co. v. United States, 37 CIT ____, ____, 938 F. Supp. 2d 1342, 1353 (2013), aff’d mem., pursuant to Fed. Cir. R. 36, 581 F. App’x 900 (Fed. Cir. 2014), Commerce did not find it necessary to consider all four factors where the exporter had not shown “autonomy from the government in making decisions regarding the selection of management.”  For remand purposes, however, the Court would like Commerce to provide further consideration of the other de facto criteria and the impact of the criterion regarding “autonomous selection of management.”

For these reasons, Commerce’s remand determination was remanded in part.

Scope Determination Remanded Back to Commerce

In DynaEnergetics U.S., Inc. v. United States and Maverick Tube Corp., Court No. 16-45, Slip Op. 17-14 (February 7, 2017), the Court considered plaintiff DynaEnergetics U.S. Inc.’s (“DynaEnergetics”) motion for judgment on the agency record pursuant to U.S. Court of International Trade Rule 56.2.  Plaintiff challenged a scope ruling concerning carrier tubing for perforating guns under the antidumping (“AD”) and countervailing duty (“CVD”) orders on Certain Oil Country Tubular Goods (“OCTG”) from the People’s Republic of China, 75 Fed. Reg. 28,551 (Dep’t Commerce May 21, 2010) (antidumping duty order and amended less than fair value determination) (“AD Order”), 75 Fed. Reg. 3,203 (Dep’t Commerce Jan. 20, 2010) (countervailing duty order and amended final countervailing duty determination) (“CVD Order”) (collectively, “AD & CVD Orders” or “Orders”). Plaintiff challenged the scope ruling as inconsistent with evidence presented on the product’s characteristics and purposes, and that Commerce’s definition of OCTG was inconsistent with scope language.  In addition to scope issues, plaintiff also asked that any such remand allow Commerce to reconsider the customs instructions associated with the scope determination.  Defendant requested a full remand to consider plaintiff’s arguments, despite defendant-intervenor’s arguments against the remand. Because defendant’s request was both legitimate and substantial, the Court granted the request for remand to reconsider the scope determination along with any appropriate instructions to Customs.

Commerce Erred in Assigning “Noncooperative” Antidumping Rate to Fully Cooperative Respondent

The Commerce Department erred when it assigned an individual antidumping duty rate of 105.59% to a Chinese respondent in an antidumping investigation, instead of the 0.14% de minimis rate calculated using the respondent’s own figures, the Court of International Trade recently ruled.

China All Mfrs. LLC v. United States, Slip Op. 17-12 (February 6, 2017) concerned the 5th administrative review of the antidumping order against Pneumatic Off-Road Tires from the People’s Republic of China. One of the mandatory respondents, Double Coin, provided complete questionnaire responses from which Commerce calculated a de minimis rate of 0.14% ad valorem. However, Commerce found that Double Coin had failed to rebut the presumption that it was State-Controlled, and thus assigned the company a rate of 105.59%, based on an average of the company’s 0.14% de minimis rate and the 210.48% “China wide” rate for state producers, calculated based on the antidumping petition.

This outcome, and the policy behind it, were invalid the Court said. There was no basis for not using the individual rate data supplied by Double Coin, which yielded the de minimis rate. Nor was there any basis for averaging this rate with the China-wide rate. Double Coin had not been uncooperative in the investigation, had provided verified information, and had not been uncooperative. Nor could Commerce introduce into Double Coin’s calculation old data concerning the “China wide” entity, which data was not involved in the instant review, and was based on a “China wide” entity of which Double Coin had not been considered a part.

Double Coin’s failure to rebut the presumption of state control was not a sufficient reason to ignore its data, the Court held, and the agency’s policy of averaging the rates in this case could not be sustained. “No ‘policy’ can justify an agency’s decision if that policy in applied to conflict with a statutory requirement”, the Court held.

The court also struck down a decision by Commerce to reduce the Export Price and Constructed Export Price by what the agency deemed “irrecoverable VAT”, noting that under Chinese tax laws and regulations, the VAT rate applied to an export was zero.  The court also ordered reconsideration of certain surrogate value factors relating to coal costs and cost of living adjustments.