Shandong Rongxin Import & Export Co. v. United States, Slip Op. 19-3

• Decision Date: 08 January 2019
• Docket Number: Court No. 17-00145,Slip Op. 19-3
• Citation: 355 F.Supp.3d 1365
• Parties: SHANDONG RONGXIN IMPORT & EXPORT CO., LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

355 F.Supp.3d 1365

SHANDONG RONGXIN IMPORT & EXPORT CO., LTD., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 19-3

Court No. 17-00145

United States Court of International Trade.

January 8, 2019

John J. Kenkel, deKieffer & Horgan, PLLC, of Washington DC, argued for plaintiff. With him on the brief were Alexandra H. Salzman, Judith L. Holzman and J. Kevin Horgan, Washington.

Melissa L. Baker, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Brendan Saslow, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Gary S. Katzmann, Judge

Katzmann, Judge: Before this court is the continuing litigation over whether an exporter in a non-market economy has adequately established the independence from governmental control necessary to be assigned a different rate from the countrywide rate. The court once again evaluates the Department of Commerce's ("Commerce") determination in an antidumping duty administrative review of Shandong Rongxin Import & Export Co., Ltd. ("Rongxin") in Certain Cased Pencils From China, 59 Fed. Reg. 66,909 (Dep't Commerce Dec. 28, 1994). Rongxin, an exporter of pencils from the People's Republic of China, challenges Commerce's determination covering the period of review ("POR") from December 1, 2014 to November 30, 2015. Certain Cased Pencils from China: Final Results, 82 Fed. Reg. 24,675 (Dep't Commerce May 30, 2017) ("Final Results"), and accompanying Issue and Decision Memorandum ("IDM"). Specifically, Rongxin contends that Commerce's determination -- that the Chinese government exerted, or has the potential to exercise, de facto control over Rongxin's day-to-day operations (including the selection of management), resulting in the application of the non-market economy countrywide rate and not the separate, company-specific rate sought by Rongxin -- was unsupported by substantial evidence and contrary to law. Rongxin contends that Commerce impermissibly filled alleged gaps in the record without affording it an opportunity to provide information regarding any supposed deficiencies and without considering existing record evidence. Rongxin also argues that it was entitled to a separate rate because it is a mandatory respondent. The court sustains Commerce's Final Results in part but remands other aspects of its determination for reconsideration.

BACKGROUND

I. Legal and Regulatory Framework

The antidumping statute empowers Commerce to impose remedial duties on imported goods that are sold in the United States at less-than-fair value if it is determined that a domestic industry is "materially injured, or threated with material injury." See 19 U.S.C. § 1673¹ ; Diamond Sawblades Manufacturers Coal. v. United States, 866 F.3d 1304, 1306 (Fed. Cir. 2017) ; Shandong Rongxin Imp. & Exp. Co. v. United States, 42 CIT ––––, ––––, 331 F.Supp.3d 1390, 1394 (2018) (" Rongxin III"). "Sales at less than fair value are those sales for which the ‘normal value’ (the price a producer charges in its home market) exceeds the ‘export price’ (the price of the product in the United States)." Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1322, 1326 (Fed. Cir. 2017) (quoting Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013) ). "Thus the amount of the antidumping duty is ‘the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise.’ " Rongxin III, 331 F.Supp.3d at 1394 (quoting 19 U.S.C. § 1673 ). Upon the request of an interested party, Commerce conducts a yearly administrative review of its antidumping duty determination and recalculates the applicable rate. 19 U.S.C. § 1675(a)(1)–(2) ; see also Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1321 (Fed. Cir. 2010) (citing 19 U.S.C. §§ 1673, 1675(a) ); Rongxin III, 331 F.Supp.3d at 1394 (citing 19 U.S.C. § 1675(a)(1)–(2) ). Commerce "shall determine the individual weighted average dumping margin for each known exporter and producer of the subject merchandise," 19 U.S.C. § 1677f-1(c)(1), but if it is not practicable to do so, Commerce may instead examine a representative group of mandatory respondents, 19 U.S.C. § 1677f-1(c)(2)² .

When a proceeding concerns a non-market economy ("NME") country³ such as China, "Commerce presumes that all respondents to the proceeding are government-controlled and therefore subject to a single country-wide antidumping duty rate." Rongxin III, 331 F.Supp.3d at 1394 (citing Dongtai Peak Honey Indus. Co. v. United States, 777 F.3d 1343, 1349–50 (Fed. Cir. 2015) ); see also Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed. Cir. 1997). However, respondents may rebut this presumption and thus establish that they are eligible for a separate rate by demonstrating that they are free from both de jure (legal) and de facto (factual) government control. Dongtai Peak Honey, 777 F.3d at 1350 ; Rongxin III, 331 F.Supp.3d at 1394.

To show that it is free of de jure control, a respondent may refer "to legislation and other governmental measures that suggest sufficient company legal freedom." AMS Assocs., Inc. v. United States, 719 F.3d 1376, 1379 (Fed. Cir. 2013). "An exporter can demonstrate the absence of de facto government control by providing 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 (taxation aside)." Rongxin III, 331 F.Supp.3d at 1394 (citing AMS Assocs., 719 F.3d at 1379 ).

"When either necessary information is not available on the record or a respondent (1) withholds information that has been requested by Commerce, (2) fails to provide such information by Commerce's deadlines for submission of the information or in the form and manner requested, (3) significantly impedes an antidumping proceeding, or (4) provides information that cannot be verified, then Commerce shall ‘use the facts otherwise available in reaching the applicable determination.’ " Dillinger France S.A. v. United States, 42 CIT ––––, ––––, 350 F.Supp.3d 1349, 1356, 2018 WL 5780933, (Oct. 31, 2018) (quoting 19 U.S.C. § 1677e(a) ). The provisions of § 1677e(a) are known as "facts available," or "neutral facts available," and the guiding principle for choosing what facts to apply is accuracy in the given case. See Agro Dutch Industries Ltd. v. United States, 31 CIT 2047, 2054 ("However, any gap-filling must later give way to actual information obtained during the course of the proceeding, whether obtained pursuant to section 1677m(d) or received fulfilling the requirements of section 1677m(e)."). This subsection thus gives Commerce a way to fill informational gaps in the administrative record. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003) ; Dillinger, 350 F.Supp.3d at 1355–56. Commerce "may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available" -- in other words, Commerce may apply adverse facts available ("AFA") -- if it "finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information[.]" 19 U.S.C. § 1677e(b)(1)(A) ; see also Dillinger, 350 F.Supp.3d at 1355–56. "A respondent's failure to cooperate to ‘the best of its ability’ is ‘determined by assessing whether [it] has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries.’ " Dillinger, 350 F.Supp.3d at 1356 (quoting Nippon Steel, 337 F.3d at 1382 ). Before applying facts available, however, Commerce must give respondents an opportunity to correct identified deficiencies in the record, "to the extent practicable ... in light of the time limits established for the completion of investigations or reviews." 19 U.S.C. § 1677m(d).

II. Factual and Procedural History

In December 1994, Commerce issued an antidumping duty order covering certain cased pencils from China. Certain Cased Pencils from China, 59 Fed. Reg. 66,909 (Dep't Commerce Dec. 28, 1994). In 2002, Commerce established that the countrywide entity rate for China was 114.9%. Notice of Amended Final Results and Partial Rescission of Antidumping Duty Administrative Review; Certain Cased Pencils from the People's Republic of China, 67 Fed. Reg. 59,049 (Dep't Commerce Sept. 19, 2002).

On December 1, 2015, Commerce gave notice to interested parties that they could request a review of its previous order regarding certain cased pencils from China. Opportunity to Request Administrative Review, 80 Fed. Reg. 75,058 (Dep't Commerce Dec. 1, 2015). In response to the notification, on December 30, 2015, Dixon Ticonderoga Company ("Dixon") requested an administrative review of Rongxin and Wah Yuen Stationery Co. Ltd.⁴ P.R. 1. On February 9, 2016, Commerce commenced a review for the POR at issue in the instant case, December 1, 2014 to November 30, 2015. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 81 Fed. Reg. 6832 (Dep't Commerce Feb. 9, 2016). Rongxin submitted such an application on March 29, 2016. P.R. 24, C.R. 11–13.

Commerce issued a Section A questionnaire to Rongxin on July 1, 2016, wherein it solicited information that would allow it to determine whether Rongxin was owned or controlled by the Chinese government. P.R. 29. On August 5, 2016, Rongxin submitted its Section A response to Commerce. P.R. 36–45, C.R. 14–28.

On November 21, 2016, Commerce issued its preliminary decision denying Rongxin's claim for a separate rate. It found that the majority ownership of Rongxin by Shandong International Trade Group ("SITG"), which was in turn owned by the Commerce...