Icdas Celik Enerji Tersane Ve Ulasim Sanayi A.S. v. United States, 021921 USCIT, 19-00149

Docket Nº:19-00149, Slip Op. 21-20
Opinion Judge:Gary S. Katzmann, Judge
Attorney:Matthew M. Nolan, Arent Fox LLP, of Washington, DC, argued for plaintiff and consolidated plaintiffs. With him on the brief were Leah Scarpelli and Natan P.L. Tubman. Ann C. Motto, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued ...
Judge Panel:Before: Gary S. Katzmann, Judge
Case Date:February 19, 2021
Court:Court of International Trade








No. 19-00149

Slip Op. 21-20

Court of Appeals of International Trade

February 19, 2021

[The court sustains Commerce's Final Results and denies Plaintiffs' motion for judgment on the agency record challenging the final affirmative determination.]

Matthew M. Nolan, Arent Fox LLP, of Washington, DC, argued for plaintiff and consolidated plaintiffs. With him on the brief were Leah Scarpelli and Natan P.L. Tubman.

Ann C. Motto, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of Counsel Reza Karamloo, Senior Attorney, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce. With them on the post argument submission was Jeffrey Bossert Clark, Acting Assistant Attorney General.

Maureen E. Thorson, Wiley Rein, LLP, of Washington, DC, argued for defendant-intervenor. With him on the brief were Alan H. Price and John R. Shane.

Before: Gary S. Katzmann, Judge


Gary S. Katzmann, Judge

Under American law, to promote fair trade in the domestic market for American goods, the United States Department of Commerce ("Commerce") conducts investigations to determine whether foreign exporters and manufacturers are introducing products into the American market for below-market prices due to subsidies given by foreign governments. Commerce can offset those prices by imposing countervailing duties ("CVD"). This case presents a number of questions relating to Commerce's CVD determination regarding steel concrete reinforcing bar ("rebar") from Turkey. Did a foreign exporter and manufacturer cooperate with Commerce's investigation to the best of its ability? Was the manufacturer's "corrective" submission improperly rejected by Commerce? Did that exporter and manufacturer receive benefits, in a variety of forms, constituting subsidies triggering the imposition of duties under American law? Plaintiff Icdas Celik Enerji Tersane ve Ulasim Sanayi A.S. ("Icdas") and Consolidated-Plaintiff Colakoglu Metalurji A.S. and Colakoglu Dis Ticaret A.S. ("Colakoglu"), foreign manufacturers and exporters of steel rebar from Turkey (collectively, "Plaintiffs") have initiated this suit against Defendant the United States ("Government") to challenge these and other aspects of Commerce's final results in the administrative review of the CVD order on Steel Concrete Reinforcing Bar From the Republic of Turkey. Steel Concrete Reinforcing Bar from the Republic of Turkey: Final Results and Partial Rescission of Countervailing Duty Administrative Review; 2016, 84 Fed. Reg. 36, 051 (Dep't Commerce July 26, 2019) ("Final Results").

Commerce's investigation resulted in a final determination that imports of rebar from Turkey produced by Icdas. were appropriately subject to CVD under Section 751 of the Tariff Act of 1930 as amended, 19 U.S.C. § 16751. Final Results, 84 Fed. Reg. at 36, 052; see also Issues and Decision Mem. (Dep't Commerce July 18, 2019) ("IDM"), P.R. 323. Commerce found that Icdas. benefited from reduced customs duties, VAT exemptions, and access to reduced-cost natural gas as a result of the general incentives scheme ("GIIS") program covering the construction of two power plants by Icdas. and an affiliated company, Icdas Elektrik. IDM at 34-38. Commerce additionally determined that the GIIS program benefits received by Icdas were contingent liabilities subject to the International Monetary Fund ("IMF") benchmark interest rate, and found that no usable tier-two natural gas benchmark information was available, resorting instead to a tier-three benchmark to determine whether natural gas was provided to Colakoglu for Less than adequate remuneration. Id at 37-38; 16-21. Finally, Commerce applied adverse facts available ("AFA") to Icdas's reported sales denominator in response to its inaccurate reporting of its total sales denominator. Id at 28-29. Plaintiffs now appeal Commerce's Final Results. Pls.' Mot. For J. on the Agency R. and Supp. Opening Br. at 1-2, Feb. 14, 2020, ECF No. 26 ("Pls.' Br."). The Government, joined by Defendant-Intervenor Rebar Trade Action Coalition ("RTAC"), supports Commerce's determination. Def's Resp. in Opp'n to Pl's Mot. For J. on Agency R., June 11, 2020, ECF No. 32 ("Def's Br."); Def-Inter. Resp. in Opp'n to Pl's Mot. For J. on Agency R., June 11, 2020, ECF No. 33 ("Def-Inter.'s. Br.").

The court concludes that Commerce's determinations were in accordance with law and based on substantial evidence. Therefore, the court denies Plaintiffs' challenge to Commerce's determination and sustains Commerce's Final Results.



Legal Background

The Tariff Act of 1930 was enacted to empower Commerce to address trade distortions caused by unfair economic practices. In particular, it provides for the investigation of potential subsidization and the imposition of duties on subject merchandise. Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046-47 (Fed. Cir. 2012); see also Bebitz Flanges Works Pvt. Ltd. v. United States, 44 CIT __, __, 433 F.Supp.3d 1309, 1314 (2020). These CVD actions are intended to be remedial rather than punitive in nature, Chaparral Steel Co. v. United States, 901 F.2d 1097, 1103 (Fed. Cir. 1990), and it is therefore Commerce's duty to determine rates as accurately as possible, Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990).

In order to impose duties under Section 701 of the Tariff Act of 1930, Commerce must first find the existence of a countervailable subsidy. A countervailable subsidy is one which satisfies the following elements: (1) a government or public authority has directly or indirectly provided a financial contribution; (2) a benefit is thereby conferred upon the recipient of the financial contribution; and (3) the subsidy is specific to a foreign enterprise or foreign industry, or a group of such enterprises or industries. See 19 U.S.C. § 1677(5)(A)-(B); see also 19 U.S.C. §§ 1677(5)(D)-(E), (5A). If Commerce determines that a foreign government is providing a countervailable subsidy with respect to the manufacture, production, or export of a class or kind of merchandise imported, sold, or likely to be sold for import into the United States, and the International Trade Commission determines that an industry in the United States is materially injured or threatened with material injury thereby, Commerce is then required by statute to impose a CVD upon such merchandise equal to the amount of the net countervailable subsidy. See 19 U.S.C. § 1677(5).

A countervailable subsidy provides a benefit where it results in the provision of goods or services for less than adequate remuneration. 19 U.S.C. § 1677(5)(E)(iv). To identify such benefit, [T]he adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service being provided or the goods being purchased in the country which is subject to the investigation or review. Prevailing market conditions include price, quality, availability, marketability, transportation, and other conditions of purchase or sale.

Id. In practice, Commerce applies a three-tier framework to determine the adequacy of remuneration. See 19 C.F.R. § 351.511. Under tier one, Commerce compares the actual remuneration for the provided goods and services with the market price of those goods or services within the country under investigation. 19 C.F.R. § 351.511(a)(2)(i). If Commerce cannot identify a usable market price within the country under investigation, it applies a tier two benchmark. Under tier two, Commerce compares actual remuneration with the average world market price available to purchasers in the country under investigation. 19 C.F.R. § 351.511(a)(2)(ii). If neither tier one nor tier two market prices are available, Commerce applies a tier three benchmark, and "measure[s] the adequacy of remuneration by assessing whether the government price is consistent with market principles." 19 C.F.R. § 351.511(a)(2)(iii).

To be specific to an enterprise or industry, a countervailable subsidy must exhibit either de jure or de facto specificity. See 19 U.S.C. § 1677(5A). A subsidy is de jure specific where the authority providing the subsidy, or its authorizing legislation, expressly limits access to the subsidy to an enterprise or industry. See 19 U.S.C. § 1677(5A)(D)(i). To avoid a designation of de jure specificity, the administering authority must ensure that access to the subsidy is governed by objective industry- or enterprise-neutral criteria resulting in automatic eligibility, and that the criteria for eligibility are both strictly followed and clearly set forth in the relevant official materials so as to be verifiable. See 19 U.S.C. § 1677(5A)(D)(ii). A subsidy that escapes de jure specificity may nevertheless be designated de facto specific if one or more of the following factors exist: (1) the actual recipients of the subsidy, whether considered on an enterprise or industry basis, are limited in number; (2) an enterprise or industry is a predominant user of the subsidy; (3) an enterprise or industry receives a disproportionately large amount of the subsidy; or (4) the manner in which the authority providing the subsidy has exercised discretion in the decision to grant the subsidy indicates that an enterprise or industry is favored...

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