Guizhou Tyre Co. v. United States

• Decision Date: 19 May 2021
• Docket Number: Consol. Court No. 19-00032,Slip Op. 21-64
• Citation: 523 F.Supp.3d 1312
• Parties: GUIZHOU TYRE CO., LTD., and Guizhou Tyre Import and Export Co., Ltd., Plaintiffs, China Manufacturers Alliance LLC, Shanghai Huayi Group Corporation Limited, and Qingdao Jinhaoyang International Co., Ltd., Consolidated-Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

523 F.Supp.3d 1312

GUIZHOU TYRE CO., LTD., and Guizhou Tyre Import and Export Co., Ltd., Plaintiffs,China Manufacturers Alliance LLC, Shanghai Huayi Group Corporation Limited, and Qingdao Jinhaoyang International Co., Ltd., Consolidated-Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 21-64

Consol. Court No. 19-00032

United States Court of International Trade.

May 19, 2021

Andrew T. Schutz, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, NY argued for plaintiffs Guizhou Tyre Co., Ltd. and Guizhou Tyre Import and Export Co., Ltd. With him on the brief were Ned H. Marshak and Jordan C. Kahn.

Matthew P. McCullough, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, DC argued for consolidated plaintiffs China Manufacturers Alliance LLC, Shanghai Huayi Group Corporation Limited and Qingdao Jinhaoyang International Co., Ltd. With him on the brief were Tung Nguyen and Kimberly Reynolds.

Kara M. Westercamp, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, DC argued for defendant United States. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director and L. Misha Preheim, Assistant Director. Of counsel on the brief was Daniel Calhoun, Legal Counsel, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION

Reif, Judge:

Phil (portrayed by Bill Murray): "Rita, I'm reliving the same day over and over."¹

* * *

This action arises from a challenge by plaintiffs, Guizhou Tyre Co., Ltd. and Guizhou Tyre Import and Export Co., Ltd. (together, "Guizhou" or "plaintiff"), consolidated plaintiffs China Manufacturers Alliance LLC ("CMA") and Shanghai Huayi Group Corporation Limited (formerly Double Coin Holdings Ltd.) ("Double Coin") (together, "consolidated plaintiffs"), and consolidated plaintiff Qingdao Jinhaoyang International Co., Ltd. ("Jinhaoyang") (all collectively "plaintiffs"), to certain aspects of the final results published by the Department of Commerce ("Commerce") of the underlying administrative review of the countervailing duty ("CVD") order on Truck and Bus Tires From the People's Republic of China , 82 Fed. Reg. 8,606 (Dep't Commerce Jan. 27, 2017) (final determination) ("Final Determination"), as amended by Truck and Bus Tires From the People's Republic of China , 84 Fed. Reg. 4,434 (Dep't Commerce Feb. 15, 2019) (am. final determination) ("CVD Order"). Commerce's findings accompanying its Final Determination were contained in an Issues and Decision Memorandum. Department of Commerce's Issues and Decision Memorandum, PD 480 (Jan. 24, 2019) ("IDM").

Plaintiff and consolidated plaintiffs filed motions for judgment on the agency record challenging the CVD Order with respect to: (1) Commerce's issuance of the CVD Order; (2) Commerce's determination to apply adverse facts available to certain previously unreported grants and loans by Guizhou just prior to and at verification; (3) Commerce's decision to apply adverse facts available to the Export Buyer's Credit Program; (4) Commerce's calculation of benchmarks regarding ocean freight and import duties in relation to certain less than adequate remuneration ("LTAR") findings; and, (5) Commerce's use of Double Coin's import purchase prices as a benchmark for synthetic rubber and butadiene. Mem. of Law in Supp. of Pls.’, Guizhou Tyre Co., Ltd., and Guizhou Tyre Import and Export Co., Ltd., Mot. for J. on the Agency R., ECF No. 39 ("Pl. Br."); Consolidated Pls.’ Br. in Supp. of Rule 56.2 Mot. for J. on the Agency R., ECF No. 41 ("Consol. Pls. Br."). Jinhaoyang filed a separate motion for judgment on the agency record challenging Commerce's decision not to assign Double Coin's cash deposit rate to Jinhaoyang. Jinhaoyang's Br. in Supp. of Rule 56.2 Mot. for J. on the Agency R., ECF No. 36 ("Jinhaoyang Br."). Defendant United States ("Government") contends that the Final Determination is supported by substantial evidence and otherwise in accordance with law. Def.’s Resp. to Mot. for J. Upon the Administrative R., ECF No. 49 ("Def. Br.").

For the reasons discussed below, the court is sustaining in part the Final Determination with respect to: (1) the issuance of the CVD Order and (2) Commerce's application of adverse facts available to the loans presented at verification. The court is remanding in part the Final Determination with respect to: (1) Commerce's decision to not assign Jinhaoyang a combination cash deposit rate; (2) Commerce's application of adverse facts available to the grants presented at verification; (3) Commerce's application of adverse facts available with respect to the Export Buyer's Credit Program; (4) Commerce's adjustment of ocean freight and import duties; and, (5) Commerce's selection of actual import prices as a benchmark for synthetic rubber and butadiene.

BACKGROUND

On February 25, 2016, Commerce published its initiation of a countervailing duty investigation on truck and bus tires from the People's Republic of China ("PRC"). The period of investigation ("POI") was January 1, 2015, through December 31, 2015. Truck and Bus Tires From the People's Republic of China , 81 Fed. Reg. 9,428 (Dep't Commerce Feb. 25, 2016) (initiation of CVD investigation). Commerce selected Guizhou and Double Coin as mandatory respondents and required Jinhaoyang, an unaffiliated exporter of the subject merchandise produced by Double Coin, to participate in Commerce's investigation. IDM at 3,17; see Letter Pertaining to Comment on Final Determination Regarding Cash Deposit Rate for Jinhaoyang at 2, PD 482 (Jan. 25, 2017).

Between April 15, 2016, and June 23, 2016, Commerce received responses from the GOC and the mandatory respondents to Commerce's initial and supplemental questionnaires, including information related to potentially countervailable subsidy programs. Department of Commerce's Preliminary Decision Memorandum at 3, PD 342 (June 28, 2016) ("PDM"); see Department of Commerce's Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, in part, and Alignment of Final Determination with Final Antidumping Determination Unpublished Federal Register, PD 341 (June 28, 2016) ("Preliminary Determination"). These programs included the Export Buyer's Credit Program ("EBCP") and the Government Policy Lending Program.

Commerce also investigated the provision of four inputs for LTAR: carbon black, nylon cord, natural rubber, and synthetic rubber and butadiene. Commerce requested information from the GOC regarding the specific companies that produced the input products that Double Coin and Guizhou purchased during the POI.

Specifically, Commerce asked the GOC for information that would allow Commerce to determine whether the producers were "authorities" within the meaning of section 771(5)(B) of the Tariff Act of 1930, 19 U.S.C. § 1677(5)(B).² PDM at 9-10, 29. Guizhou and Double Coin reported that they purchased all four inputs during the POI. Id. at 29.

I. Preliminary Determination

On June 28, 2016, Commerce issued its Preliminary Determination. Commerce found, based on an analysis of monthly shipment data submitted by Double Coin and Guizhou, that "critical circumstances exist with respect to imports of truck and bus tires from the PRC for mandatory respondent [Guizhou]," Preliminary Determination at 3-4, but that critical circumstances did not exist with respect to exports from Double Coin and all other producers or exporters. PDM at 7-8. Commerce assigned a preliminary rate of 17.06% for Double Coin, a rate of 23.38% for Guizhou, and an all-others rate of 20.22%. Preliminary Determination at 5. Jinhaoyang was not included in the rate assigned to Double Coin. Id.

A. LTAR Benchmarks

Commerce found that the GOC did not act to the best of its ability in responding to Commerce's requests for information about the ownership of the suppliers of carbon black, nylon cord, natural rubber, and synthetic rubber and butadiene. Commerce found that the GOC did not provide any information on the record for Commerce to "analyze for purposes of determining whether [the input suppliers] are under the management or control of the GOC." PDM at 10. Consequently, Commerce applied adverse facts available ("AFA") to find that these suppliers were "authorities" within the meaning of 19 U.S.C. § 1677(5)(B), and as such, the provision of carbon black, nylon cord, natural rubber, and synthetic rubber and butadiene constituted a financial contribution under 19 U.S.C. § 1677(5)(D)(iii). Id. at 29.

Because Commerce determined that the input suppliers were "authorities," Commerce also found that prices from the suppliers did not constitute market-determined prices. Id. at 23. Thus, Commerce turned to comparative benchmarks for determining whether a government good or service was provided for LTAR. In determining benchmarks for carbon black, Commerce preliminarily found that the domestic market for carbon black was distorted and relied on world market prices as the Tier 2 benchmark. Id. at 23. For nylon cord, Commerce preliminarily relied on Chinese import prices as the Tier 1 benchmark. For natural rubber and synthetic rubber and butadiene, Commerce looked to actual monthly weighted-average import prices of natural and synthetic rubber reported by respondents during the POI as a basis for calculating Tier 1 benchmark prices. Id. at 24.

For all of these inputs, Commerce preliminarily included, when it considered that it was necessary, ocean freight and inland freight charges that would have been incurred to deliver the input to the respondents’ production facilities. Id. at 30. The benchmark prices were then compared to respondents’ reported purchase prices for individual domestic transactions, including VAT and any delivery charges. Id. Based on this comparison, Commerce preliminarily found that all four inputs were provided for LTAR. Id.

B. Government Policy Lending

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