Qingdao Taifa Group Co., Ltd. v. U.S.

Decision Date12 May 2010
Docket NumberCourt No. 08-00245,Slip Op. No. 10-53
PartiesQINGDAO TAIFA GROUP CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Gleason Industrial Products, Inc. and Precision Products, Inc., Defendant-Intervenors.
CourtU.S. Court of International Trade

Adduci, Mastriani & Schaumberg, LLP (Louis S. Mastriani and William C. Sjoberg), Washington, DC, for plaintiff.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Stephen C. Tosini); Thomas M. Beline, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, for defendant.

Crowell & Moring LLP (Matthew P. Jaffe and Alexander H. Schaefer), Washington, DC, for defendant-intervenors.

Before: Jane A. Restani, Chief Judge.

OPINION

RESTANI, Chief Judge.

Plaintiff Qingdao Taifa Group Co., Ltd. ("Taifa") challenged the final results of an administrative review of the antidumping duty order on hand trucks and certain parts thereof from the People's Republic of China ("PRC"), which assigned Taifa the PRC-wide dumping margin of 383.60% based on total adverse facts available ("AFA"). See Hand Trucks and Certain Parts Thereof from the People's Republic of China; Final Results of 2005-2006 Administrative Review, 73 Fed.Reg. 43,684 (Dep't Commerce July 28, 2008) (" Final Results "). Following initial briefing and oral argument, the court granted in part and denied in part Taifa's motion for judgment on the agency record and remanded the matter to the United States Department of Commerce ("Commerce") to determine whether a government entity exercised nonmarket control over Taifa sufficient to link the PRC-wide rate to Taifa and to calculate a separate, substitute AFA rate if the PRC-wide were not warranted. Qingdao Taifa Group Co. v. United States, 637 F.Supp.2d 1231 (CIT 2009) (" Taifa I "). The court now reviews Commerce's Final Results of Redetermination Pursuant to Court Remand (Dep't Commerce Jan. 22, 2010) (Docket No. 100) (" Remand Results "). For the reasons stated below, the court remands the matter to Commerce again.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold Commerce's final determination in an antidumping review unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

BACKGROUND

In February 2007, Commerce initiated an administrative review of the antidumping duty order on hand trucks and certainparts thereof from the PRC with respect to Taifa for the period December 1, 2005, through November 30, 2006. Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 72 Fed.Reg. 5005 (Dep't Commerce Feb. 2, 2007). Taifa submitted a separate rate certification and responses to Commerce's questionnaires stating that the government did not control or own any interest in Taifa. ( See App. of Docs. in Supp. of Pl.'s Mem. of P. & A. in Supp. of Pl.'s Mot. for J. on the Agency R. Tab 1; Def.'s App. 13; Def.-Intervenors' App. to Mem. of P. & A. in Opp'n to Pl.'s Mot. for J. on the Agency R. Tab 3, at 2-3.) Taifa also stated in its questionnaire responses that it did not sell wheels with its hand trucks. ( See Def.'s App. 41, 56.) Commerce's Preliminary Results, issued in January 2008, applied an individual weighted-average dumping margin of 3.82% for Taifa, while the PRC-wide rate was 383.60%. Hand Trucks and Certain Parts Thereof from the People's Republic of China; Preliminary Results, Partial Intent to Rescind and Partial Rescission of the 2005-06 Administrative Review, 73 Fed.Reg. 2214, 2222 (Dep't Commerce Jan. 14, 2008) (" Preliminary Results ").

Commerce conducted verification of Taifa in April 2008 and issued its verification report in June 2008. (Def.'s App. 81.) According to the report, Commerce found production notices for subject merchandise that referenced wheels, and a Taifa manager admitted that Taifa sold hand trucks and wheels together but did not attach the wheels to avoid antidumping duties. ( See id. at 93.) The report also indicated that Taifa officials misrepresented that they had destroyed Taifa's production notices and factory-out slips and that Taifa employees attempted to remove and hide pages from the current production subledger. ( Id. at 91-93.)

The report further stated that some documents indicated that a collective called Qingdao Taifa Group Co. owned a majority of Taifa's shares, but other documents indicated that the Yinzhu Town Government owned those shares. ( Id. at 83-87.) Specifically, Commerce found that a Capital Verification Report, Application for Registration of the Company's Establishment, Circular of Jiaonan City State Assets Management Bureau: Approval of Equity Settlement for Preparing to set up Qingdao Taifa Group Co., Ltd., and Certification by the Jiaonan City Yinzhu Town People's Government, all dated 1997, list the Yinzhu Town People's Government as the holder of 51.42% or 18 million shares of Taifa's stock. ( Id. at 84-87.) All other documents identified the collective Qingdao Taifa Group Co. as the owner of those shares. ( See id. at 87.) Commerce's verification report also found that documents reflecting a 2003 transfer of the majority interest to other individuals, a 2003 Shares Transfer Agreement and Taifa's 2003 Articles of Association, were not registered with the proper Chinese authorities.1 ( Id. at 85-86.) Commerce found no other evidence of government control. ( Id. at 88-89.)

In its July 2008 Final Results, Commerce determined that Taifa failed to cooperate with the review, applied total AFA, denied Taifa a separate rate, and assigned Taifa the PRC-wide margin of 383.60%. Final Results, 73 Fed.Reg. at 43,686-88. Taifa challenged the Final Results.

In Taifa I, the court concluded that AFA was appropriate for all of the factsrelevant to Taifa's sales and factors of production data based on Taifa's failure to report data relating to wheels shipped with its hand trucks and Taifa's conduct at verification. 637 F.Supp.2d at 1238-40. The court, however, held that Commerce could not apply AFA to conclude that Taifa was government-controlled because the mere evidence that the town government had an ownership interest in Taifa, without any additional evidence of or explanation about why there was a finding of government control, was insufficient to support the application of the PRC-wide rate as the AFA rate. Id. at 1240-44. Because Commerce never made a final factual determination about the presence or absence of government control over Taifa, the court remanded for a proper analysis of government control, instructing Commerce "to determine whether a government entity exercised de facto nonmarket control over Taifa sufficient to link the China entity rate to Taifa" and to "calculate a separate, substitute AFA rate" if the PRC-wide was not warranted. Id. at 1244.

On remand, Commerce concluded that it could not affirmatively demonstrate that a government entity exercised control over Taifa and calculated a 227.73% separate AFA rate for Taifa. Remand Results at 3. Following remand, defendant-intervenors Gleason Industrial Products, Inc. ("Gleason") and Precision Products, Inc. ("Precision") challenge Commerce's conclusion that Taifa is entitled to a separate rate. (Gleason and Precision's Comments on Final Results of Redetermination Pursuant to Court Remand 2-11.) Taifa asserts that Commerce misinterpreted the court's remand instructions as shifting the burden of proving entitlement to a separate rate away from Taifa, but Taifa agrees with Commerce's determination that Taifa is entitled to a separate rate. (Taifa's Comments on Final Redetermination on Remand 2-4.) Taifa also challenges the 227.73% AFA rate. ( Id. at 5-23).

DISCUSSION

Commerce misconstrued the remand instructions as requiring Commerce "to affirmatively demonstrate" that a government entity exercised de facto control over Taifa before it could apply the PRC-wide rate to Taifa and as shifting the burden of proof away from a respondent claiming a separate rate. Remand Results at 4. The court did not address the strength or effect of Commerce's presumption of government control for a respondent in a nonmarket economy ("NME") country or for the PRC in particular. Taifa I, 637 F.Supp.2d at 1240 n. 6.2

Under this presumption, a respondent receives the NME country-wide rate, rather than a separate, company-specific rate, unless it affirmatively demonstrates an absence of central government control, both de jure and de facto, with respect to exports. See Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed.Cir.1997). Evidence of absence of de jure government control "includes: (1) [a]n absence of restrictive stipulations associated with an individual exporter's business and export licenses; (2) any legislative enactments decentralizing control of companies; or (3) any other formal measures by the government decentralizing control of companies." Final Determination of Sales at Less Than Fair Value: Sparklers From the People's Republic of China, 56 Fed.Reg. 20,588, 20,589 (Dep't Commerce May 6, 1991); see also Coal. for the Pres. of Am. Brake Drum & Rotor Aftermarket Mfrs. v. United States, 44 F.Supp.2d 229, 242 (CIT 1999) (" Brake Drum "). Evidence of absence of de facto government control includes whether: (1) "each exporter sets its own export prices independently of the government and other exporters;" (2) "each exporter can keep the proceeds from its sales;" (3) "the Respondent has authority to negotiate and sign contracts and other agreements;" and (4) "the Respondent has autonomy from the government in making decisions regarding the selection of management." Brake Drum, 44 F.Supp.2d at 243 (citing Notice of Final Determination of Sales at Less Than Fair Value:...

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3 cases
  • Qingdao Taifa Group Co. v. United States
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    ...A. Restani, Judge.OPINIONRESTANI, Judge. This matter comes before the court following its decision in Qingdao Taifa Grp. Co. v. United States, 710 F.Supp.2d 1352 (CIT 2010) (“ Taifa II ”), in which the court remanded the Final Results of Redetermination Pursuant to Court Remand (Dep't Comme......

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