China Mfrs. Alliance, LLC v. United States

• Citation: 1 F.4th 1028
• Decision Date: 10 June 2021
• Docket Number: 2020-1159
• Parties: CHINA MANUFACTURERS ALLIANCE, LLC, Double Coin Holdings Ltd., Plaintiffs-Appellees Guizhou Tyre Co., Ltd., Guizhou Tyre Import and Export Co., Ltd., Plaintiffs v. UNITED STATES, Defendant-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

1 F.4th 1028

CHINA MANUFACTURERS ALLIANCE, LLC, Double Coin Holdings Ltd., Plaintiffs-Appellees

Guizhou Tyre Co., Ltd., Guizhou Tyre Import and Export Co., Ltd., Plaintiffs

v.UNITED STATES, Defendant-Appellant

2020-1159

United States Court of Appeals, Federal Circuit.

Decided: June 10, 2021

James P. Durling, Curtis, Mallet-Prevost, Colt & Mosle LLP, Washington, DC, argued for plaintiffs-appellees. Also represented by Christopher A. Dunn, Daniel L. Porter ; Gene C. Schaerr, Schaerr Jaffe LLP, Washington, DC.

John Jacob Todor, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Brian M. Boynton, Jeanne Davidson, Franklin E. White, Jr. ; Paul Keith, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Before Lourie, Clevenger, and Hughes, Circuit Judges.

Clevenger, Circuit Judge.

The United States appeals from the final judgment of the United States Court of International Trade ("Trade Court"), which held that the Department of Commerce ("Commerce") could not apply an existing China-wide antidumping duty rate, applicable to all Chinese exporters that had not demonstrated independence from the Chinese government, to Double Coin Holdings Ltd. ("Double Coin"), even though it is undisputed that Double Coin failed to demonstrate independence from the Chinese government. For the reasons set forth below, we reverse the final judgment of the Trade Court and remand for further proceedings consistent with this opinion.

BACKGROUND

Initial Investigation and Four Administrative Reviews

The background to this appeal begins with Commerce's antidumping investigation into "Certain New Pneumatic Off-The-Road Tires from the People's Republic of China." Commerce's Final Determination in this investigation encompassed a period of investigation from October 1, 2006 through March 31, 2007 and was published on July 15, 2008. Certain New Pneumatic Off–The-Road Tires from the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances , 73 Fed. Reg. 40,485, 40,485 –92 (Dep't of Commerce July 15, 2008); see also Certain New Pneumatic Off-the-Road Tires from the People's Republic of China: Notice of Amended Final Affirmative Determination of Sales at Less Than Fair Value and Antidumping Duty Order , 73 Fed. Reg. 51,624 (Dep't of Commerce Sept. 4, 2008). In antidumping investigations concerning countries with non-market economies ("NMEs"), such as the People's Republic of China ("PRC"), Commerce applies a presumption that all exporters are subject to government control. Our court has previously approved Commerce's application of a presumption of government control over exporters in NME countries, as well as Commerce's use of a single antidumping rate for an NME-wide entity composed of companies that have not demonstrated their independence from government control. See Sigma Corp. v United States , 117 F.3d 1401, 1405–06 (Fed. Cir. 1997). In its Final Determination, Commerce identified Double Coin as among the companies that had overcome the presumption of government control and assigned Double Coin a separate weighted-average antidumping margin.¹ The "PRC-wide entity," comprising all exporters that failed to overcome the presumption of government control (i.e., all exporters not individually listed in Commerce's Final Determination) was assigned a rate of 210.48%. Commerce calculated this rate from facts available with an adverse inference ("adverse facts available" or "AFA"), based on Commerce's determination that the PRC-wide entity had "failed to cooperate [with Commerce's investigation] to the best of its ability" because the record indicated that there were many exporters of subject merchandise who failed to respond to Commerce's questionnaires. Certain New Pneumatic Off-The-Road Tires from the People's Republic of China; Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination , 73 Fed. Reg. 9278, 9285 (Dep't of Commerce Feb. 20, 2008) ; 73 Fed. Reg. at 40,488.

Commerce subsequently conducted three annual administrative reviews of the antidumping duty order.² Double Coin's individual assigned antidumping rate remained in place following each of these reviews. The PRC-wide entity rate remained at 210.48%. A fourth annual antidumping review was initiated by Commerce, but was rescinded before it was conducted after all parties that requested a review timely withdrew their requests.³

Fifth Administrative Review and Trade Court Proceedings

Notice of initiation of the fifth administrative review (the review on appeal in this case) was published in November 2013. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part , 78 Fed. Reg. 67,104 (Dep't of Commerce Nov. 8, 2013). Double Coin was selected as a mandatory respondent in this review. Id . at 67108 ; see also J.A. 168–226, 168⁴ (Issues and Decision Memorandum for Final Results of Antidumping Duty [Fifth] Administrative Review). Double Coin fully cooperated with Commerce during the course of the fifth administrative review.

Based on the information Double Coin submitted to Commerce during the review, Commerce initially calculated a de minimis 0.14% final antidumping margin for Double Coin. J.A. 371. However, Commerce also determined that Double Coin had "failed to demonstrate absence of de facto government control over export activities due to the fact that its controlling shareholder is wholly owned by the State-owned Assets Supervision and Administration Commission of the State Council and the significant level of control this majority shareholder wields over the respondent's Board of Directors," and was thus not eligible for its separate rate.⁵ Certain New Pneumatic Off-the-Road Tires from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review; 2012–2013 , 79 Fed. Reg. 61,291, 61,293 (Dept. of Commerce Oct. 10, 2014) ; see also Certain New Pneumatic Off-the-Road Tires from the People's Republic of China: Amended Final Results of Antidumping Duty Administrative Review; 2012–2013 , 80 Fed. Reg. 26,230 (Dep't of Commerce May 7, 2015). Commerce's policy, which we have approved, is that exporters that fail to demonstrate independence from government control do not qualify for a separate rate. Transcom, Inc. v. United States , 294 F.3d 1371, 1373 (Fed. Cir. 2002) ; see also 78 Fed. Reg. at 67,111 n.10 (Initiation Notice of fifth administrative review, stating that exporters who do not qualify for a separate rate will be deemed part of a single China-wide entity).

Commerce's practice in place at the time of the fifth administrative review was to conditionally review the NME entity during an administrative review of an antidumping duty order if one or more of the exporters subject to the review did not demonstrate that it was separate from the NME entity (i.e., did not overcome the presumption of government control). J.A. 178–79. Thus, Commerce's Initiation Notice for the fifth administrative review put the PRC entity in this case on notice that it was conditionally subject to the review: "If one of the above-named companies does not qualify for a separate rate, all other exporters of Certain New Pneumatic Off-the-Road Tires [from] the PRC who have not qualified for a separate rate are deemed to be covered by this review as part of the single PRC entity of which the named exporters are a part." See 78 Fed. Reg. at 67,111 n.10.

Following from Double Coin's failure to overcome the presumption of control by the Chinese government, the PRC-wide entity (including Double Coin) became subject to the fifth administrative review. J.A. 179. Commerce thus reviewed the assigned PRC-wide antidumping rate, which had previously been set at 210.48%. Because Double Coin fully cooperated with Commerce and had provided Commerce with its verified sales and production data (resulting in the calculated rate of 0.14%), but no other portion of the PRC entity had provided data to Commerce, Commerce determined that it was "able to calculate a margin for an unspecified portion of a single PRC-wide entity [i.e. Double Coin], but cannot do so for the remaining unspecified portion of the entity [i.e., any and all other exporters in the PRC-wide entity]." 79 Fed. Reg. at 61,293. Commerce thus performed a simple average of the previous PRC-wide rate and the calculated rate for Double Coin, to arrive at a final rate of 105.31% applicable to the PRC-wide entity (including Double Coin). 80 Fed. Reg. at 26,231.

Multiple companies, including Double Coin, challenged the Final Results of the fifth administrative review before the Trade Court. See China Mfrs. Alliance, LLC v. United States , 205 F. Supp. 3d 1325 (C.I.T. 2017) ( CMA I ). In CMA I , the Trade Court concluded that because Commerce had selected Double Coin to participate in the review as a mandatory respondent and had calculated an individual rate for Double Coin (prior to determining that Double Coin failed to demonstrate independence from the Chinese Government), the antidumping statute 19 U.S.C. § 1677f-1(c) required Commerce to assign the calculated individual rate of 0.14% to Double Coin, notwithstanding Commerce's policy to assign the PRC-wide entity rate to manufacturers that failed to demonstrate independence from the Chinese government. 205 F. Supp. 3d at 1339–41. The Trade Court determined that, because Double Coin fully cooperated with Commerce's investigation, Commerce could not lawfully carry forward against Double Coin the adverse inferences built into the original PRC-wide 210.48% rate, because to do so would apply a punitive rate to a cooperating party. 205 F. Supp. 3d at 1334–41. The Trade Court held that Commerce could not permissibly assign any rate other than...