New Am. Keg v. United States
| Decision Date | 23 March 2021 |
| Docket Number | Court No. 20-00008,Slip Op. 21-30 |
| Parties | NEW AMERICAN KEG, d/b/a AMERICAN KEG COMPANY, Plaintiff, v. UNITED STATES, Defendant, and NINGBO MASTER INTERNATIONAL TRADE CO., LTD., AND GUANGZHOU JINGYE MACHINERY CO, LTD, Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Before: M. Miller Baker, Judge
OPINION AND ORDER[Plaintiff's motion for judgment on the agency record is granted in part and denied in part.]
Whitney M. Rolig, Andrew W. Kentz, and Nathaniel Maandig Rickard, Picard Kentz & Rowe LLP of Washington, DC, on the briefs for Plaintiff.
Ashley Akers, Trial Attorney, Commercial Litigation Branch, Ethan P. Davis, Acting Assistant Attorney General, Jeanne P. Davidson, Director, and Patricia M. McCarthy, Assistant Director, Civil Division, U.S. Department of Justice of Washington, DC, on the brief for Defendant. Of counsel on the brief was Vania Wang, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce of Washington, DC.
Gregory S. Menegaz, J. Kevin Horgan, and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, DC, on the brief for Defendant-Intervenors.
Baker, Judge: Last week, the nation and much of the world celebrated St. Patrick's Day. Some of those celebrations involved green beer, often tapped from steel kegs. This case is about steel kegs (but without the green beer).
After an investigation, the Commerce Department recently determined that imported Chinese beer kegs were being dumped in the U.S., i.e., sold within the U.S. at below what would be the normal sales price if China had a market economy. Based on that determination, Commerce imposed a hefty antidumping duty on Chinese kegs in general but exempted one major Chinese exporter that was individually investigated and two smaller exporters.
As to the major exporter that Commerce investigated, a domestic keg manufacturer objected that the Department's errors in calculating labor costs and verifying information allowed the exporter to escape antidumping duties. As to the two smaller exporters, the domestic manufacturer objected to Commerce's determination that they were free from Chinese government control and therefore could enjoy whatever antidumping rate Commerce assigned to the investigated major exporter.
Commerce denied those objections. The domestic manufacturer then brought this action challenging Commerce's decision, prompting the investigated Chinese exporter and one of the smaller exporters to intervene as defendants. After full briefing on the domestic manufacturer's motion for judgment on the agency record, the Court now grants the motion as to the investigated exporter's labor costs and verification issues. As to the issue of the two smaller exporters' eligibility for a separate rate, the Court grants the domestic manufacturer's motion as to one but denies it as to the other. Finally, the Court remands for further proceedings consistent with this opinion.
1. Commerce and ITC investigations
The federal antidumping statute provides a mechanism for imposing remedial duties on merchandise sold, or likely to be sold, in the United States at "less than its fair value." 19 U.S.C. § 1673(1). That mechanism allows an "interested party," as defined in the Tariff Act of 1930,1 to file a petition with Commerce and the International Trade Commission alleging that a U.S. domestic industry is materially injured or threatened with material injury by imports that are being, or are likely to be, sold in the U.S. at less than fair value. U.S. Int'l Trade Comm'n, Publication 4540, Antidumping and Countervailing Duty Handbook at I-3 (14th ed. June 2015), available at https://www.usitc.gov/trade_remedy/documents/handbook.pdf (accessed Mar. 22, 2021).
Commerce then investigates whether the petition contains sufficient allegations of dumping and, if so, whether dumping is occurring, while the ITC investigates whether the relevant domestic industry is being, or is likely to be, materially injured. If both agencies find in the affirmative, Commerce publishes an antidumping order in the Federal Register imposing an antidumping duty "in an amount equal to the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise." 19 U.S.C. § 1673.2 The antidumping duty is in additionto any other duty imposed on the subject merchandise. Id.
2. Selection of respondents
In theory, the goal of an antidumping investigation is to determine the extent to which every individual foreign exporter's U.S. selling price for the subject merchandise is lower than its "normal value," as required by statute: "In determining weighted average dumping margins . . . , [Commerce] shall determine the individual weighted average dumping margin for each known exporter and producer of the subject merchandise." 19 U.S.C. § 1677f-1(c)(1). The goal is theoretical because the statute then sets forth an exception to the general rule when there are numerous exporters.
For such cases where "it is not practicable to make individual weighted average dumping margin determinations . . . because of the large number of exporters or producers involved in the investigation," Commerce may determine margins "for a reasonable number of exporters or producers" by limiting its investigation to either a statistically valid sample of exporters or producers or "exporters and producers accounting for the largest volume of the subject merchandise from the exporting country that can be reasonably examined." Id. § 1677f-1(c)(2).
When Commerce invokes the statutory exception, it selects "mandatory respondents" for individual examination. As the term implies, mandatory respondents are required to respond to Commerce's information requests during an investigation. Commerce determines individual antidumping rates for the mandatory respondents, 19 U.S.C. § 1673d(c)(1)(B)(i)(I).3
3. Verification
A critical aspect of Commerce's antidumping investigation involves "verification" of mandatory respondents. The statute provides that Commerce "shall verify all information relied upon in making . . . a final determination in an investigation." 19 U.S.C. § 1677m(i)(1). Commerce's implementing regulations provide that the Department will visit (1) producers, exporters, or importers; (2) their affiliates; or (3) unaffiliated purchasers "in order to verify the accuracy and completeness of submitted factual information" and that the personnel making such visits "will request access to all files, records, and personnel which the Secretary considers relevant to factual information submitted." 19 C.F.R. § 351.307(d)(1)-(3).
"Verification is like an audit, the purpose of which is to test information provided by a party for accuracy and completeness." Bomont Indus. v. United States, 733 F. Supp. 1507, 1508 (CIT 1990) (cleaned up). Commerce has latitude in how it conducts verification, and there is no requirement to verify all information submitted by a respondent. U.S. Steel Corp. v. United States, 953 F. Supp. 2d 1332, 1348 (CIT 2013).
When, as here, an antidumping investigation involves products produced in a non-market economy,4 the statutory and regulatory scheme requires Commerce to undertake additional areas of inquiry. Two such inquiries relevant here are whether an exporter is subject to a general rate applicable to the country and determining what the "normal" price for the product in question would be if the country had a market economy.
In general, when Commerce makes an affirmative determination that dumped goods are coming from a non-market economy country, Commerce applies a rebuttable presumption that every exporter or producerwithin that country is government-controlled and is therefore subject to a single country-wide dumping margin. See 19 C.F.R. § 351.107(d); see also Changzhou Hawd Flooring Co. v. United States, 947 F.3d 781, 792 (Fed. Cir. 2020).
Because the presumption is rebuttable, a company may ask Commerce to apply a separate rate if the company demonstrates "sufficient independence from state control." Changzhou Wujin Fine Chem. Factory Co. v. United States, 701 F.3d 1367, 1370 (Fed. Cir. 2012). A successful separate rate applicant thus escapes the country-wide antidumping rate.
The company seeking the separate rate must "affirmatively demonstrate" its independence. Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed. Cir. 1997). To that end, Commerce requires exporters or producers who wish to receive a separate rate to submit a "separate rate application" "and to demonstrate an absence of both de jure and de facto government control over their export activities." ECF 28, at 621.5
As Commerce explained in its final decision here, if the Department determines that a company from a nonmarket economy is independent from government control, the Department will assign an antidumping rate based on its investigation of the company rather than apply the country-wide rate. See ECF 17-5, at 4. If Commerce does not investigate a company that isotherwise eligible for a separate rate, then the Department will generally assign an antidumping rate based on the average rate of companies so investigated. Id.6
As noted above, the antidumping statute requires that Commerce determine the subject merchandise's "normal value" and then compare that value to the export price or constructed export price. 19 U.S.C. § 1677b(a). When goods subject to antidumping investigation are produced in a country with a non-market economy, the statute requires Commerce to assume that home-market sales are not reliable indicators of normal value because the economy is presumed to be under state control. Taian Ziyang Food Co. v. United States, 637 F....
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