Guizhou Tyre Co. v. United States

• Decision Date: 17 October 2018
• Docket Number: Consolidated Court No. 17-00101,Slip Op. 18-140
• Citation: 348 F.Supp.3d 1261
• Parties: GUIZHOU TYRE CO., LTD., Guizhou Tyre Import and Export Co., Ltd., and Xuzhou Xugong Tyres Co., Ltd., Plaintiffs, and Tiajin United Tire and Rubber International Co., Ltd., Plaintiff-Intervenor, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

348 F.Supp.3d 1261

GUIZHOU TYRE CO., LTD., Guizhou Tyre Import and Export Co., Ltd., and Xuzhou Xugong Tyres Co., Ltd., Plaintiffs,andTiajin United Tire and Rubber International Co., Ltd., Plaintiff-Intervenor,

v.UNITED STATES, Defendant.

Slip Op. 18-140

Consolidated Court No. 17-00101

United States Court of International Trade.

Dated: October 17, 2018

Ned H. Marshak & Andrew T. Schutz, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of New York, NY, and Richard P. Ferrin & Douglas J. Heffner, Drinker Biddle & Reath, LLP, of Washington, D.C., for plaintiffs.

John Tudor, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Emma T. Hunter, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Mark B. Lehnardt, Baker Hostetler, LLP, of Washington, D.C., for plaintiff-intervenor.

OPINION AND ORDER

Richard W. Goldberg, Senior JudgeGoldberg, Senior Judge: This action arises from a challenge by plaintiffs, Guizhou Tyre Co., Ltd. and Guizhou Tyre Import and Export Co., Ltd., (collectively, "Guizhou" or "GTC"), consolidated plaintiff Xuzhou Xugong Tyres Co., Ltd., ("Xugong"), and intervenor-plaintiff Tianjin United Tire & Rubber International Co., Ltd. ("TUTRIC") (collectively "Plaintiffs") to certain aspects of the final results published by the Department of Commerce ("the Department" or "Commerce") of the underlying administrative review of the countervailing duty order on off-the-road tires ("OTR tires") from the People's Republic of China ("PRC"). Certain New Pneumatic Off-the-Road Tires from the People's Republic of China , 82 Fed. Reg. 18,285 (Dep't Commerce Apr. 18, 2017) (final results), amended by Certain New Pneumatic Off-the-Road Tires from the People's Republic of China, 82 Fed. Reg. 40,554 (Dep't Commerce Aug. 25, 2017) (am. final results) (" Amended Final Results "). Plaintiffs have filed summary judgment motions, Pls'. Mot. for J. on Agency R., ECF No. 63 (Jan. 5, 2018) ("Pls.' Br."), challenging Commerce's Amended Final Results with respect to: (1) Commerce's use of an adverse inference—and subsequent application of an adverse rate—in determining use of the China Export-Import Bank's Export Buyer's Credit program; (2) various aspects of the benchmarks used in calculating the benefits associated with several programs for less than adequate remuneration; and (3) Commerce's decision to countervail the Import Duty Exemption For Imported Raw Materials Program. Xugong filed a separate motion for judgment on the pleadings, Xugong Mot. for J. on Agency R., ECF No. 62 (Jan. 5, 2018) ("Xugong Br."), and TUTRIC has adopted and incorporated the challenges brought by both Guizhou and Xugong, TUTRIC Mot. for J. on Agency R., ECF No. 64 (Jan. 5, 2018).

For the reasons discussed below, the court remands the Department's findings with respect to the adverse inference applied to the Expert Buyer's Credit program, remands and sustains in part the Department's benchmark calculations, and sustains the Department's decision to countervail the Import Duty Exemption for Imported Raw Materials Program.

BACKGROUND

On November 9, 2015, Commerce initiated a review of the countervailing duty order on certain OTR tires from the PRC based upon timely requests from interested parties during the period of review between January 1, 2014 and December 31, 2014. Antidumping and Countervailing Duty Administrative Reviews , 80 Fed. Reg. 69,193 (Dep't Commerce Nov. 9, 2015) (initiation). On February 3, 2016, Commerce selected Guizhou and Xugong as mandatory respondents. Resp't Selection Mem., Joint Appendix, ECF No. 79 ("J.A.") Tab 2 (Jan. 29, 2016). Both parties, as well as the Government of China ("GOC"), responded to the Department's initial and supplemental questionnaires. GOC Initial Questionnaire Resp., J.A. Tab 4 (Apr. 13, 2016) ("GOC Initial Questionnaire Resp."); GTC Initial Questionnaire Resp., J.A. Tab 5 (Apr. 19, 2016) ("GTC Initial Questionnaire Resp."); GOC New Subsidy Allegations ("NSA") Questionnaire Resp., J.A. Tab 15 (Aug. 19, 2016) ("GOC NSA Questionnaire Resp."); GTC NSA Questionnaire Resp., J.A. Tab 14 (Aug. 19, 2016) ("GTC NSA Questionnaire Resp."); GTC First Supp. Resp., J.A. Tab 13 (Aug. 19, 2016) ("GTC First Supp. Resp.").

On October 14, 2016, Commerce issued its preliminary results from the administrative review based on the parties' questionnaire responses. Certain New Pneumatic Off-the-Road Tires From the People's Republic of China , 81 Fed. Reg. 71,056 (Dep't Commerce Oct. 14, 2016) (prelim. results) (" Preliminary Results ") and accompanying Prelim. Decision Mem., J.A. Tab 25 (Oct. 5, 2016) ("PDM"). In its preliminary findings, the Department determined that (1) the GOC failed to provide answers regarding the China Export-Import Bank Buyer's Credit Program, PDM at 14; (2) Guizhou and Xugong benefited from the provision of certain inputs at less-than-adequate remuneration, using Tier 2 benchmark measurements for carbon black and nylon cord, and Tier 1 benchmark measurements for the import prices of natural and synthetic rubber, id. at 22; and (3) the import duty and value added tax (VAT) exemptions on imports of raw materials were countervailable subsidies, id. at 35. Commerce determined that because the GOC failed to provide responses to a series of questions related to the Export Buyer's Credit Program—countering the GOC's allegation of non-use—the Department was permitted to apply an adverse inference in selecting from the facts otherwise available that Guizhou and Xugong used and benefited from the program. Id. at 38.

The Department's final decision largely echoed its preliminary findings. Certain New Pneumatic Off-the-Road Tires from the People's Republic of China , 82 Fed. Reg. 18,285 (Dep't Commerce Apr. 18, 2017) (final results) (" Final Results ") and accompanying Issues & Decision Mem., J.A. Tab 33 (Apr. 12, 2017) ("I & D Mem."). Commerce continued to include ocean and inland freight delivery charges and added import duty and VAT payments into the benchmark prices, despite Guizhou's position that these duties should not be included because it does not pay import duties or VAT on imported inputs. I & D Mem. at 9. As a result, the Department found a 34.46 percent ad valorem countervailable subsidy rate for Guizhou, and a 46.01 percent subsidy rate for Xugong. Id. Later, the Department issued a memorandum, amending the Final Results to include quarterly synthetic rubber benchmark data, as submitted by petitioners, following the Department's initial error in using figures for natural rubber benchmarks. Ministerial Error Mem., J.A. Tab 38 (Aug. 21, 2017) ("Ministerial Error Mem."). The amended final results were published on August 25, 2017. See generally Amended Final Results .

Plaintiffs' motion for judgment followed, challenging Commerce's Amended Final Results with respect to: (1) Commerce's use of an adverse inference in selecting from among the facts available in determining use of the China Export-Import Bank's Export Buyer's Credit program by both Xugong and Guizhou; (2) Commerce's selection of the adverse rate applied to the Export Buyer's Credit program; (3) various aspects of the benchmarks used in calculating the benefits associated with several programs for less than adequate remuneration, including nylon cord, synthetic rubber, and carbon black; and (4) Commerce's decision to countervail the Import Duty Exemption For Imported Raw Materials Program. Pls.' Br. Xugong filed a separate motion for judgment on the pleadings. Xugong Br. For the reasons discussed below, the court sustains in part and remands in part Commerce's Amended Final Results .

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction to hear this appeal under 28 U.S.C. § 1581(c). The court will sustain Commerce's determination unless the court concludes that the determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law ...." 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence amounts to "more than a mere scintilla" of evidence. Universal Camera Corp. v. N.L.R.B. , 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951). It is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Id. In other words, "substantial evidence" "can be translated roughly to mean ‘is [the determination] unreasonable?’ " Nippon Steel Corp. v. United States , 458 F.3d 1345, 1351 (Fed. Cir. 2006).

DISCUSSION

Plaintiffs raise challenges to the Department's determinations regarding: (1) China's Export-Import Bank Buyer's Credit Program; (2) the Department's calculation of benchmarks measuring adequate remuneration for synthetic rubber, carbon black, and nylon cord; (3) China's VAT and Import Duty Exemption for Imported Raw Materials Program as a countervailing subsidy; and (4) the rate calculations formulated for the VAT aspect of the VAT and Import Duty Exemption for Imported Raw Materials Program. The court sustains Commerce's decision to countervail the VAT and Import Duty Exemption for Imported Raw Materials Program. For the remaining issues raised by plaintiffs, the court remands in part, pursuant to the below.

I. China Export Import Bank Buyer's Credit Program

In its review, Commerce examined whether Plaintiffs potentially benefited from China's Export Buyer's Credit Program (the "Program"), which provides loans to foreign companies to promote the export of Chinese goods. See Antidumping and Countervailing Duty Administrative Reviews , 80 Fed. Reg. 69,193 (Dep't Commerce Nov. 9, 2015) (initiation). Commerce issued two questionnaires to the respondents, both seeking information regarding the Program. Commerce NSA Questionnaire to...