425 F.Supp.2d 1321 (CIT. 2006), 05-00324, Canadian Lumber Trade Alliance v. United States

Docket Nº:Court No. 05-00324.
Citation:425 F.Supp.2d 1321
Party Name:CANADIAN LUMBER TRADE ALLIANCE; Norsk Hydro Canada, Inc.; Canadian Wheat Board; Ontario Forest Indus. Ass'n; Ontario Lumber Mfgs Ass'n; the Free Trade Lumber Council; and the Government of Canada, Plaintiffs, v. The UNITED STATES of America; Deborah J. Spero, Acting Commissioner, United States Customs & Border Protection; and United States Customs
Case Date:April 07, 2006
Court:Court of International Trade
 
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425 F.Supp.2d 1321 (CIT. 2006)

CANADIAN LUMBER TRADE ALLIANCE; Norsk Hydro Canada, Inc.; Canadian Wheat Board; Ontario Forest Indus. Ass'n; Ontario Lumber Mfgs Ass'n; the Free Trade Lumber Council; and the Government of Canada, Plaintiffs,

v.

The UNITED STATES of America; Deborah J. Spero, Acting Commissioner, United States Customs & Border Protection; and United States Customs & Border Protection, Defendants,

and

Coalition for Fair Lumber Imps. Executive Comm.; U.S. Magnesium, LLC; United States Steel Corp.; U.S. Foundry & Mfg. Co.; Neenah Foundry Co.; Allegheny Ludlum Corp; AK Steel Corp.; East Jordan Iron Works, Inc.; Lebaron Foundry Corp.; Municipal Castings, Inc.; and North Dakota Wheat Comm'n; Defendant-Intervenors.

Slip Op. 06-48.

Court No. 05-00324.

United States Court of International Trade.

April 7, 2006

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Steptoe & Johnson, LLP, Washington, DC (Mark A. Moran, Kaija Wadsworth, Matthew S. Yeo, and Michael T. Gershberg) for Plaintiff Canadian Lumber Trade Alliance.

Steptoe & Johnson, LLP, Washington, DC (Gregory S. McCue) for Plaintiff Norsk Hydro Canada, LLC.

Steptoe & Johnson, LLP, Washington, DC (Edward J. Krauland, Joel D. Kaufman, and Thomas R. Best) for Plaintiff Canadian Wheat Board.

Sidley Austin LLP (Neil R. Ellis, Andrew W. Shoyer, Carter G. Phillips, Lawrence R. Walders, and Richard D. Bernstein) for Plaintiff Government of Canada.

Baker & Hostetler, LLP (Elliot J. Feldman, John Burke, Michael S. Snarr, and Bryan J. Brown) for Plaintiffs Ontario Forest Industries Association, Ontario Lumber Manufacturers Association, and the Free Trade Lumber Council.

Stuart E. Schiffer, Deputy Assistant Attorney General, Washington, DC; David M. Cohen, Director, Jean E. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Kenneth M. Dintzer, Senior Trial Counsel, and David S. Silverbrand, Trial Attorney) for Defendant United States.

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Dewey Ballantine LLP, Washington, DC (Bradford L. Ward, Harry L. Clark, Linda A. Andros, Mayur R. Patel, and Rory F. Quirk) for Defendant-Intervenor Coalition for Fair Lumber Imports Executive Committee.

King & Spalding, LLP, Washington, DC (Joseph W. Dorn, Stephen A. Jones, and Jeffrey M. Telep) for Defendant-Intervenor U.S. Magnesium LLC.

Skadden Arps Slate Meagher & Flom, LLP, Washington, DC (John J. Mangan, Jeffrey D. Gerrish, and Robert E. Lighthizer) for Defendant-Intervenor United States Steel Corporation.

Collier, Shannon, Scott, PLLC, Washington, DC (Michael R. Kershow, Mary T. Staley, Paul C. Rosenthal, and Robin H. Gilbert) for Defendant-Intervenors Neenah Foundry Company, Municipal Castings, Incorporated, LeBaron Foundry Incorporated, East Jordan Iron Works, Incorporated, Allegheny Ludlum Corporation, and AK Steel Corporation.

Troutman Sanders LLP (Charles Alvin Hunnicutt, and G. Brent Connor) for Defendant-Intervenor North Dakota Wheat Commission.

Pillsbury, Winthrop, Shaw, Pittman, LLP (Stephan E. Becker, Sanjay J. Mullick, and Joshua D. Fitzhugh) for Amicus Curiae Government of Mexico.

OPINION

POGUE, Judge.

This case presents two key questions: First, whether domestic law authorizes the Government of Canada and/or its exporters to challenge in this court the administration of the United States' trade laws, particularly the Continued Dumping and Subsidy Offset Act of 2000, Pub.L. No. 106-387, § 1003, 114 Stat. 1549, 1623 (2000) codified at 19 U.S.C. § 1675c (the "Byrd Amendment"). The United States Bureau of Customs and Border Protection ("Customs" or "Defendant" or "Commissioner"), 1 relying on the Byrd Amendment, distributes to domestic producers who are competitors of the Plaintiff Canadian exporters the duties collected as a result of antidumping and countervailing orders on Canadian goods. If Plaintiffs are authorized to challenge the Defendant's implementation of the Byrd Amendment by bringing this action, the second issue is whether Customs is authorized to distribute funds collected from duty orders on Canadian (and Mexican) imports of goods where the Byrd Amendment does not specifically so direct.

For the reasons stated below, the court finds that the Plaintiff Canadian exporters, but not the Government of Canada, are authorized to bring this action, and that Customs has violated U.S. law, specifically a provision of the NAFTA Implementation Act in applying the Byrd Amendment to antidumping and countervailing duties on goods from Canada and Mexico, 19 U.S.C. § 3438.

BACKGROUND

A.

In the early 1990's, the United States, Canada and Mexico negotiated, and signed, the North American Free Trade Agreement ("NAFTA"). See North American

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Free Trade Agreement Implementation Act Statement of Administrative Action ("SAA"), reprinted in H.R. Doc. No. 103-159, p. 1 (1993); Xerox Corp. v. United States, 423 F.3d 1356, 1358 (Fed.Cir. 2005); Made in the USA Found. v. United States, 242 F.3d 1300, 1302-03 (11th Cir. 2001). NAFTA aims to achieve "the liberalization of trade in goods and services, removal of barriers to investment, [and] the protection and enforcement of intellectual property rights[.]" SAA, reprinted in H.R. Doc. No. 103-159, p. 3 (1993).

As is relevant here, NAFTA allows the United States (and the other NAFTA parties) to amend their antidumping and countervailing duty laws "provided that ... [any] amendment shall apply to goods from another Party only if the amending statute specifies that it applies to goods from that Party or from the Parties to this Agreement." North American Free Trade Agreement, art.1902(2)(a) (1993) (entered into force Jan. 1, 1994) (reprinted in Jackson, et al, 2002 Documents Supplement to Legal Problems of International Economic Relations at 512 (4th ed.2002)) (emphasis added). 2 NAFTA further requires that, if the United States does amend its antidumping or countervailing duty laws as to goods from Canada or Mexico: (1) it will notify "in writing the Parties to which the amendment applies of the amending statute as far in advance as possible of the date of enactment of such statute," (2) it will consult with the affected party before adopting the amending statute, and (3) any such amendment may not run counter to the General Agreement on Tariffs and Trade ("GATT") or the principles of NAFTA. Id. at art.1902(2)(b)-(d).

Congress approved NAFTA in the North American Free Trade Agreement Implementation Act ("NAFTA Implementation Act")

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which also amended U.S. law to reflect the NAFTA framework. NAFTA Implementation Act, Pub.L. No. 103-182, 107 Stat.2060-2164 (1993), codified at 19 U.S.C. §§ 3301-3473 (2000). Specifically, in implementing NAFTA art.1902, Section 408 of the NAFTA Implementation Act, codified at 19 U.S.C. § 3438 ("Section 408"), provides that "[a]ny amendment ... [to] title VII of the Tariff Act of 1930 [19 U.S.C. §§ 1671 et seq.], or any successor statute ... shall apply to goods from a NAFTA country only to the extent specified in the amendment." The NAFTA Implementation Act, including 19 U.S.C. § 3438, became effective January 1, 1994.

B.

Subsequent to the passage of the NAFTA Implementation Act, in 2000, Congress amended Title VII of the Tariff Act of 1930 with the passage of the Byrd Amendment, 19 U.S.C. § 1675c. The passage of the Byrd Amendment was intended to strengthen the remedial purposes of the antidumping and countervailing duty laws. 3 Specifically, prior to the Byrd Amendment, under Title VII of the Tariff Act of 1930, Customs collected antidumping and countervailing duties on dumped and subsidized imports, implementing such orders to attempt to neutralize the distortive and adverse effects of dumping and subsidization; Customs then deposited all revenues collected from these duties into the U.S. Treasury, from which the duties were available to pay for general government expenses. See generally 21A Am Jur 2d, Customs Duties and Import Regulations § 221 (2004) ("In general, all receipts from customs must be promptly paid into the Treasury.").

After the Byrd Amendment's passage, Customs still collects antidumping and countervailing duties that attempt to neutralize the distortive and adverse effects of dumping and subsidization, but now, following the Byrd Amendment, Customs deposits all duties collected into "special accounts" established within the U.S. Treasury for each antidumping and countervailing duty order. 19 U.S.C. § 1675c(e); 19 C.F.R. § 159.64. 4 In addition, each year, Customs distributes all

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monies contained in those special accounts, plus interest, on a pro rata basis, to "affected domestic producers," i.e., companies (who continue to produce the subject merchandise under the antidumping or countervailing duty order) and worker groups that supported the petition for the antidumping or countervailing duty order. The funds distributed, known as the "continued dumping and subsidy offset," 19 U.S.C.§ 1675c(a); 19 C.F.R. § 159.61(a) ("Byrd Distributions"), are intended to strengthen trade law remedies, through an allocation based on "qualifying expenditures," i.e., certain enumerated business expenses such as manufacturing facilities, equipment, input materials, health benefits for employees, and "[w]orking capital or other funds needed to maintain production," paid by affected domestic producers, 19 U.S.C. §§ 1675c(b)(4); 1675c(d)(2)-(3); 19 C.F.R. § 159.61(c).

On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 repealing the Byrd Amendment. See, Deficit Reduction Act of 2005, Pub.L. No. 109-171, § 7601(b), 120 Stat. 4, 154 (2006). As provided by this repeal: "All duties on...

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