Kaptan Demir Celik Endustrisi Ve Ticaret A.S. v. United States

• Decision Date: 26 April 2023
• Docket Number: 21-00565,Slip Op. 23-62
• Parties: KAPTAN DEMIR CELIK ENDUSTRISI VE TICARET A.S., Plaintiff, v. UNITED STATES, Defendant, COLAKOGLU DIS TICARET A.S. and COLAKOGLU METALURJI A.S., Plaintiff-Intervenors, and REBAR TRADE ACTION COALITION, BYER STEEL GROUP, INC., COMMERCIAL METALS COMPANY, GERDAU AMERISTEEL U.S. INC., NUCOR CORPORATION, and STEEL DYNAMICS, INC., Defendant-Intervenors.
• Court: U.S. Court of International Trade

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KAPTAN DEMIR CELIK ENDUSTRISI VE TICARET A.S., Plaintiff,

COLAKOGLU DIS TICARET A.S. and COLAKOGLU METALURJI A.S., Plaintiff-Intervenors,
v.
UNITED STATES, Defendant,

and REBAR TRADE ACTION COALITION, BYER STEEL GROUP, INC., COMMERCIAL METALS COMPANY, GERDAU AMERISTEEL U.S. INC., NUCOR CORPORATION, and STEEL DYNAMICS, INC., Defendant-Intervenors.

No. 21-00565

Slip Op. No. 23-62

Court of Appeals of International Trade

April 26, 2023

[The court remands the Department of Commerce's final determination.]

Andrew T. Schutz, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington, D.C., argued for Plaintiff Kaptan Demir Celik Endustrisi Ve Ticaret A.S. With him on the brief were Kavita Mohan, Jordan C. Kahn.

Matthew M. Nolan, Nancy A. Noonan, Diana Dimitriuc Quaia, Jessica R. DiPietro and Leah N. Scarpelli, ArentFox Schiff LLP, of Washington, D.C., for Plaintiff-Intervenors Colakoglu Dis Ticaret A.S. and Colakoglu Metalurji A.S.

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Sosun Bae, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, L. Misha Preheim, Assistant Director. Of counsel on the briefs was W. Mitch Purdy, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Maureen Thorson, Wiley Rein, LLP, of Washington, D.C, argued for Defendant-Intervenor Rebar Trade Action Coalition and its individual members. With her on the briefs were Alan H. Price and John R. Shane.

Before: Gary S. Katzmann, Judge

OPINION AND ORDER

GARY S. KATZMANN JUDGE

Plaintiff Kaptan Demir Celik Endustrisi ve Ticaret A.S. ("Kaptan"), a Turkish producer and exporter of steel concrete reinforcing bar ("rebar"), in its Motion for Judgment on the Agency Record, challenges certain aspects of the final results of the U.S. Department of Commerce ("Commerce") in the 2018 administrative review of the countervailing duty order on rebar from Turkey published in Steel Concrete Reinforcing Bar From the Republic of Turkey: Final Results of Countervailing Duty Administrative Review and Rescission, in Part; 2018, 86 Fed.Reg. 53279 (Dep't Com. Sept. 27, 2021), P.R. 288 ("Final Results"), and the accompanying Issues and Decision Memorandum, Mem. from J. Maeder to C. Marsh, re: Issues and Decision Memorandum For the Final Results of the Countervailing Duty Administrative Review of Steel Concrete Reinforcing Bar from the Republic of Turkey; 2018 (Dep't Com. Sept. 21, 2021), P.R. 283 ("IDM"). Plaintiff-Intervenors Colakoglu Metalurji A.S. and Colakoglu Dis Ticaret A.S. ("Colakoglu"), a foreign manufacturer and foreign exporter of rebar from Turkey, also moved for judgment on the agency record.

Defendant United States ("the Government") and domestic producers, Defendant-Intervenors Rebar Trade Action Coalition, Byer Steel Group, Inc., Commercial Metals Company, Gerdau Ameristeel U.S. Inc., Nucor Corporation, and Steel Dynamics, Inc., ("Domestics"), oppose Kaptan's motion. The Government and Domestics submit that Commerce's Final Results are

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supported by substantial evidence and in accordance with law. The Government and Domestics, however, do not object to Colakoglu's motion for a separate rate adjustment should Kaptan succeed in securing a recalculation of its overall subsidy rate as a result of this action.

For the reasons articulated below, the court finds that with respect to Commerce's attribution to Kaptan of subsidies of Nur Gemicilik ve Tic. A.S. ("Nur"), a ship building company affiliated with Kaptan, Commerce has not provided adequate explanation in the Final Results regarding its determination that Nur was a "cross-owned input supplier" of primarily dedicated inputs under 19 C.F.R. § 351.525(b)(6)(iv). The court thus remands the Final Results for further review and explanation.

FACTUAL AND LEGAL BACKGROUND

I. Regulatory and Legal Framework

Countervailing duties ("CVDs") are duties imposed on merchandise imported into the United States to "countervail" or offset the effect of subsidies granted by foreign governments. See 19 U.S.C. § 1671(a). Foreign governments sometimes subsidize domestic industries to benefit the production or exportation of merchandise and thereby confer an advantage in the trading system. If the International Trade Commission determines that the advantage causes material injury to the relevant domestic producers or domestic industry, Commerce calculates the amount of benefit conferred and may issue a CVD order to offset this unfair advantage. See Guangdong Wireking Housewares & Hardware Co. v. United States, 745 F.3d 1194, 1203 (Fed. Cir. 2014) ("The congressional intent behind the enactment of countervailing duty and antidumping law generally was to create a civil regulatory scheme that remedies the harm unfair trade practices cause.").

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One of the core questions in CVD investigations is whether a subsidy is "countervailable," or the subsidy meets the statutory and regulatory definition of an actionable subsidy. See Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365, 1369 (Fed. Cir. 2014). The Tariff Act of 1930 ("Tariff Act") provides that before Commerce may impose a CVD on merchandise imported into the United States, it must determine that "the government of a country or any public entity within the territory is providing, directly or indirectly, a countervailable subsidy with respect to the manufacture, production, or export of that merchandise." 19 U.S.C. § 1671(a)(1) (emphasis added). "Except as provided in paragraph (5B), a countervailable subsidy is a subsidy described in [paragraph (5)(B)] which is specific as described in paragraph (5A)." Id. § 1677(5)(A).

Thus, the determination of CVDs ultimately rests on whether a subsidy meets the "descriptions" contained in section 771 of the Tariff Act, as codified in Chapter 19 of the United States Code, section 1677. In general, a countervailable subsidy is described as follows:

A subsidy is described in this paragraph in the case in which an authority--

(i) provides a financial contribution

(ii) provides any form of income or price support within the meaning of Article XVI of the GATT 1994, or

(iii) makes a payment to a funding mechanism to provide a financial contribution, or entrusts or directs a private entity to make a financial contribution, if providing the contribution would normally be vested in the government and the practice does not differ in substance from practices normally followed by governments,

to a person and a benefit is thereby conferred. For purposes of this paragraph and paragraphs (5A) and (5B), the term "authority" means a government of a country or any public entity within the territory of the country.

19 U.S.C. § 1677(5)(B). In short, the key elements are...