Gold E. Paper (Jiangsu) Co. v. United States

• Decision Date: 23 November 2015
• Docket Number: Consol. Court No. 10–00371,Slip Op. 15–131
• Citation: 121 F.Supp.3d 1304
• Parties: Gold East Paper (Jiangsu) Co., Ltd., Ningbo Zhonghua Paper Co., Ltd., and Global Paper Solutions, Plaintiffs, and Bureau of Fair Trade for Imports & Exports, Ministry of Commerce, People's Republic of China, Plaintiff–Intervenor, v. United States, Defendant, and Appleton Coated LLC, Newpage Corp., S.D. Warren Company d/b/a Sappi Fine Paper North America, and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL–CIO–CLC, Defendant–Intervenors.
• Court: U.S. Court of International Trade

121 F.Supp.3d 1304

Gold East Paper (Jiangsu) Co., Ltd., Ningbo Zhonghua Paper Co., Ltd., and Global Paper Solutions, Plaintiffs,andBureau of Fair Trade for Imports & Exports, Ministry of Commerce, People's Republic of China, Plaintiff–Intervenor,

v. United States, Defendant,andAppleton Coated LLC, Newpage Corp., S.D. Warren Company d/b/a Sappi Fine Paper North America, and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL–CIO–CLC, Defendant–Intervenors.

Slip Op. 15–131

Consol. Court No. 10–00371

United States Court of International Trade.

Decided: November 23, 2015

Daniel L. Porter, James P. Durling, and Claudia D. Hartleben, Curtis, Mallet–Prevost, Colt & Mosle LLP, of Washington DC, for the plaintiffs and plaintiff-intervenor.

Alexander V. Sverdlov, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington DC, for defendant. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of Counsel on the brief was Mykhaylo A. Gryzlov, Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce.

Terence P. Stewart, William A. Fennell, and Stephanie M. Bell, Stewart and Stewart, of Washington, DC, and Gilbert B. Kaplan, Joseph W. Dorn, and Daniel L. Schneiderman, King & Spalding, LLP, of Washington DC, for the defendant-intervenors.

OPINION

Musgrave, Senior Judge:

The defendant's International Trade Administration, U.S. Department of Commerce ("Commerce") has submitted its third Final Results of Redetermination Pursuant to Court Remand ("Redetermination " or "RR3") on the antidumping duty investigation into Certain Coated Paper from the PRC.¹ Familiarity with the case² is presumed. To summarize, the investigation was remanded for (1) further insight into the use of market economy purchase ("MEP") prices for certain inputs procured from the Kingdom of Thailand by or for the plaintiffs (herein "APP–China"), and (2) further explanation of the targeted dumping methodology utilized.

On remand, Commerce determined to disregard the MEP prices for the relevant inputs from Thailand because they had likely benefitted from subsidies and therefore were likely distorted. This changed the calculation of the normal value for APP–China but not the number of APP–China sales that were found to be targeted. See RR3 at 10. Commerce also considered whether its current differential pricing methodology involving the Cohen's d test was a more appropriate measure of whether the targeted sales were "pervasive" than the prior Nails test. Id . at 8–11. After considering the question, Commerce determined that it was not; therefore it continued to rely on the Nails test in determining that APP–China's targeted was not "pervasive." Id. However, due to the changes in APP–China's calculated normal value occasioned by the foregoing, Commerce determined that it was appropriate to apply the average-to-transaction ("A–T") comparison to APP–China's targeted sales, and to apply the standard average-to-average ("A–A") comparison to the remainder. Id . at 9 n.42. APP–China's final dumping margin was 3.64 percent. Id .

APP–China contests Commerce's decision to reject the Thai input prices, and the defendant-intervenors ("Appleton") argue for remand of the targeted dumping issue, in particular the agency's decision to rely on the Nails test instead of differential pricing analysis. These issues are addressed in turn.

I

APP–China argues that Commerce's disregard of Thai prices for certain inputs represents an unexplained and unlawful reversal from the second remand determination. See generally APP–China Br. at 2–11. The court concludes otherwise.

As previously noted, Commerce may disregard prices for inputs purchased from market-economy countries based on its prior findings that a country maintained broadly-available, non-industry-specific export subsidies, if there is no evidence that the subsidy had been terminated and the flow of benefits had ceased. See Gold East III, 39 CIT at ––––, 61 F.Supp.3d at 1297–98. Among other things, Commerce's normal practice when analyzing whether claimed MEPs for inputs are useable is to provide parties with an opportunity to submit "evidence that the program has been terminated and flow of the residual benefits has ceased". See id., 39 CIT at –––– n. 16, 61 F.Supp.3d at 1297 n. 16 (quoting Commerce's practice). Commerce in the second remand explained its practice but at the time believed that its use had been precluded by the law of the case. Gold East III, however, clarified that the practice was not inconsistent therewith and could be used. See id., 39 CIT at ––––, 61 F.Supp.3d at 1297–98. Thus, during the third remand, Commerce applied its normal practice and analyzed the evidence that had been submitted during the second remand in accordance with its established standards. See RR3 at 6, 15.

Commerce explained that the evidence indicated that the Thai Tax Certificates for Export program had previously been countervailed as a generally-available export subsidy. See RR3 at 6, citing Certain Apparel From Thailand: Final Results of Countervailing Duty Administrative Review, 62 Fed.Reg. 63071 (Nov. 26, 1997) ("1997 Apparel Review "). Absent evidence that the program was terminated and the flow of benefits ceased, Commerce considers that the benefits under the program continue, and in this matter Commerce found that such evidence had not been provided.³ Based on the information of record, therefore, Commerce determined that there was reason to believe or suspect that Thai prices were distorted by subsidies and that APP–China's claimed MEPs therefor should be disregarded. RR3 at 6.

APP–China argues that Commerce improperly changed its position from the second remand, or that it did not articulate the basis for a different conclusion when "the legal standard did not change and there is no new factual evidence." APP–China Br. at 3. However, the legal standard itself did not change, Commerce's understanding of it did after the prior decisions on the case were clarified in the latest remand opinion. Commerce detailed how this changed understanding led to a different result. See RR3 at 6, 15 (noting that "given ... clarification that [Commerce's] normal practice is not at odds with [prior judicial] decisions," there was no reason "to depart from [the] normal practice here").

APP–China contends that the presumption Commerce uses contravenes the Federal Circuit's holding in AK Steel Corp. v. United States, 192 F.3d 1367 (Fed.Cir.1999). APP–China Br. at 3–4. In APP–China's view, that case stands for the proposition that Commerce "must provide evidence to support a reasonable inference that the subsidy continues into the period of investigation." Id . (emphasis omitted). AK Steel considered what evidence was required to support finding that a countervailable subsidy actually existed for purposes of actually imposing a countervailing duty order. See generally AK Steel, 192 F.3d at 1370. The Federal Circuit explained that when analyzing this issue in the context of a full-blown countervailing duty investigation, the fact that a subsidy existed at some point is insufficient; it must be found to have existed during the relevant period. AK Steel, 192 F.3d at 1376. AK Steel is therefore inapposite, because the standard for finding the existence of a subsidy in the countervailing duty context necessary to support imposition of a countervailing duty is higher, and therefore different, from a "reason to believe or suspect" standard that permits disregard of prices Commerce reasonably believes or suspects are distorted.⁴ The prior remand order explicitly recognized that this standard can be satisfied when a subsidy program is shown to have existed in the past, and no evidence is presented showing that the program has been terminated and the flow of benefits has ceased. See Gold East III, 39 CIT at ––––, 61 F.Supp.3d at 1298–99. On remand, Commerce found that to be the case based on prior countervailing duty proceedings that found broadly available, non-industry-specific export subsidies in Thailand, and APP–China submitted no evidence showing that the program had been terminated. See RR3 at 6, 15. And substantial evidence of record supports that determination. See id .

APP–China's argument that Commerce's remand analysis does not satisfy the test set out in Fuyao II fails for the same reason. See APP–China Br. at 5–7. The decision in Gold East III clarified that Fuyao II is just one way that Commerce may evaluate whether the evidence before it gives it a reason to believe or suspect that prices have been distorted, and is not the only "reasonable method." Gold East III, 39 CIT at ––––, 61 F.Supp.3d at 1298–99 ; see also CS Wind Vietnam Co. v. United States, 38 CIT ––––, 971 F.Supp.2d 1271, 1292 (2014) (making a similar observation). Commerce did not have to satisfy the particular test of Fuyao II as long as it "articulated with sufficient clarity" why it has "a valid belief or suspicion that input prices are distorted." Gold East III, 39 CIT at ––––, 61 F.Supp.3d at 1299. Commerce has done so here.

Commerce first recognized that it had previously countervailed the Thai tax coupon program as an export subsidy and pointed to a determination in which it had done so. See RR3 at 6, 18. Commerce described this program as one through which the Thai government "issue[d] tax certificates to exporters of record to rebate indirect taxes and import duties levied on inputs into exported products." Id . at 18 n.77. Next, Commerce explained that, under its practice, once the agency has determined that a particular program is countervailable, there is a presumption that the subsidy continues to exist absent evidence that the program has been terminated or benefits have ceased. Id . at 6–7; see Gold East III, 39...