Shandong Rongxin Import & Export Co. v. United States

• Citation: 331 F.Supp.3d 1390
• Decision Date: 29 August 2018
• Docket Number: Court No. 15-00151,Slip Op. 18-107
• Parties: SHANDONG RONGXIN IMPORT & EXPORT CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Dixon Ticonderoga Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

331 F.Supp.3d 1390

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

v.UNITED STATES, Defendant,andDixon Ticonderoga Company, Defendant-Intervenor.

Slip Op. 18-107

Court No. 15-00151

United States Court of International Trade.

Dated: August 29, 2018

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

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

Felicia Leborgne Nowels, Akerman LLP, of Tallahassee, FL, argued for defendant-intervenor. With her on the brief was Sheryl D. Rosen.

OPINION

Katzmann, Judge:

In this third round of litigation before the Court of International Trade, the Court returns to a "case about pencils," but much more than that. Shandong Rongxin Imp. & Exp. Co. v. United States, 41 CIT ––––, ––––, 203 F.Supp.3d 1327 (2017). It is well-established that in determining the antidumping margin applied to goods from a non-market economy ("NME"), there is a rebuttable presumption that respondents in such proceedings are government-controlled and subject to a single country-wide anti-dumping rate. The principal issue now under review is whether the exporter of goods from an NME has shown the absence of de facto government control and is entitled to a separate rate. Plaintiff, Shandong Rongxin Import & Export Co., Ltd. ("Rongxin"), an exporter of pencils from the People's Republic of China ("PRC" or "China"), challenges the Final Results of Redetermination Pursuant to Court Remand, May 19, 2017, ECF Nos. 87–88 ("Second Remand Results"). Rongxin initially brought this action against Defendant, the United States ("the Government"), on May 22, 2015, disputing certain aspects of the final administrative review results issued by the United States Department of Commerce ("Commerce") in Certain Cased Pencils from the People's Republic of China, 80 Fed. Reg. 26,897 (Dep't Commerce May 11, 2015) (final results of antidumping duty administrative review, 2012–2013) ("Final Results") and accompanying Issues and Decision Memorandum at 2 (Apr. 30, 2015) ("IDM"). Since then, the Court has twice remanded this case to Commerce for further consideration of certain discrete issues. Rongxin now asks this Court to order another remand, while the Government and Defendant-Intervenor, Dixon Ticonderoga Company ("Dixon"), ask the Court to sustain Commerce's determination. For the reasons provided herein, the Court sustains Commerce's Second Remand Results in full.

BACKGROUND

A. Legal Background

Pursuant to 19 U.S.C. § 1673 (2012),¹ Commerce imposes antidumping duties on foreign goods if they are being or are likely to be sold in the United States at less than fair value and the International Trade Commission ("ITC") determines that the sale of the merchandise at less than fair value materially injures, threatens, or impedes the establishment of an industry in the United States. Diamond Sawblades Manufacturers Coal. v. United States, 866 F.3d 1304, 1306 (Fed. Cir. 2017). "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." 19 U.S.C. § 1673. Upon the request of an interested party, Commerce conducts a yearly administrative review of the antidumping duty order and calculates a new antidumping duty rate. Id. § 1675(a)(1)–(2). In these proceedings, 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).

This case concerns Commerce's discrete procedure for determining the antidumping duty margin applied to goods from an NME country, here the PRC. An NME country, such as China, is "any foreign country that [Commerce] determines does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise." 19 U.S.C. § 1677(18)(A). In antidumping duty proceedings involving merchandise from an NME country, Commerce presumes that all respondents to the proceeding are government-controlled and therefore subject to a single country-wide antidumping duty rate. Dongtai Peak Honey Indus. Co. v. United States, 777 F.3d 1343, 1349–50 (Fed. Cir. 2015) (citing Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed. Cir. 1997) ). However, respondents may rebut the presumption of government control, and thus become eligible for a separate rate, by establishing the absence of both de jure (legal) and de facto (factual) government control. Id. at 1350.

An exporter can demonstrate the absence of de jure control by referring "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). Id. If a respondent fails to establish its independence, Commerce continues to presume government control and applies the country-wide rate to that respondent. Dongtai 777 F.3d at 1350 (citing Transcom, Inc. v. United States, 182 F.3d 876, 882 (Fed. Cir. 1999) ).

B. Factual and Procedural Background

On December 21, 1994, the ITC published its determination that an industry in the United States is materially injured or threatened with material injury by reason of imports from the PRC of certain cased pencils that Commerce had determined to be sold in the United States at less than fair value. Certain Cased Pencils from the People's Republic of China, USITC Pub. 2837, Inv. No. 731–TA–669, 59 Fed. Reg. 65,788 (Dec. 21, 1994) (final determination). On December 28, Commerce published the antidumping duty order covering certain cased pencils from China. Certain Cased Pencils from the People's Republic of China, 59 Fed. Reg. 66,909 (Dep't Commerce Dec. 28, 1994) (final results of antidumping duty order).

On December 20, 2013, pursuant to 19 U.S.C. § 1675, Dixon filed a request for administrative review of Rongxin, an exporter of pencils from the PRC. Req. for Admin. Rev., PR 1 (Dec. 20, 2013). In accordance with its Articles of Association, Rongxin is a corporation owned by eleven shareholders and directed by a six-member board. Rongxin First Suppl. Questionnaire Resp. at Ex. SQ-2, Revised Rongxin Articles of Association, PR 40, CR 23–24 (Oct. 16, 2014) ("Articles"); Rongxin's Sec. A Questionnaire Resp. at Ex. A–2, Shareholders, PR 22–26, CR 4–15 (Apr. 3, 2015). Slightly more than a majority of Rongxin² is owned by Shandong International Trade Group ("SITG"), which in turn is wholly-owned by the State-Owned Assets Supervision and Administration Commission ("SASAC"). Rongxin's Sec. A Questionnaire Resp. at 2. The remainder of Rongxin is owned by ten Rongxin employees. Id.

On February 3, 2014, Commerce initiated an administrative review of Rongxin. The Period of Review ("POR") covered by the administrative review was December 1, 2012, through November 30, 2013. IDM at 1. During the administrative review, Rongxin argued that, first, it deserves a separate rate because it can demonstrate the absence of government control both de jure and de facto, and second, Commerce should rescind the initiation of the administrative review because there is no evidence on the record that Dixon is a domestic manufacturer entitled to request a review.

As noted, in the process of determining whether an exporter is entitled to a separate rate, Commerce

considers four factors in evaluating whether a respondent is subject to de facto government control of its export functions: (1) whether the export prices are set by, or are subject to the approval of, a government agency; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding the disposition of profits or financing of losses.

IDM at 7; see AMS Assocs., 719 F.3d at 1379. In its responses to Commerce's questionnaires, Rongxin provided various statements relating to all four factors of the de facto control inquiry:

1. Export price:

"Once Rongxin receives a detailed inquiry from a client, Rongxin has Guangming [Rongxin's supplier of pencils] evaluate all the costs and determine a price quote. Then, Rongxin determines a reasonable profit and make a price quote to the client." Rongxin's First Suppl. Questionnaire Resp. at 7. "Rongxin did not confer with SITG ... to establish the pencil price sold to the United States during the POR." Id. at 4. "Prices are set via direct competitive negotiations directly with customers. The prices are not subject to review or guidance by any governmental organization. Exhibit A–5 contains...