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.