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.