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US Defends NME Policy in AD Reviews at CAFC, Cites Precedent, Logic of Policy

The U.S. Court of Appeals of the Federal Circuit has consistently permitted the Commerce Department's use of its non-market economy policy in antidumping cases, the U.S. told the appellate court in a Jan. 18 opening brief. Appealing a Court of International Trade decision calling into question the NME policy, the government argued that "Congress has afforded Commerce wide latitude in how it enforces and implements" the AD statute and "this Court has consistently sustained Commerce's exercise of this discretion, in the absence of unambiguous statutory direction" (Jilin Forest Industry Jinqiao Flooring Group Co. v. United States, Fed. Cir. # 23-2245).

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The statute at issue in the case,19 U.S.C. 1673d, says that Commerce shall set the estimated weighted averaged dumping margin for each individually investigated producer, though the statute doesn't specify what procedure the agency should use when dealing with NME countries. Nowhere in the statute does it say that Commerce cannot use its NME policy, whereby it sets a country-wide rate and allows a mandatory respondent to rebut the presumption of foreign state control, nor does the statute require the use of the respondent's own data, the U.S. said.

The trade court ruled in February 2023 that Commerce failed to explain how its NME policy is rooted in either the statute or the agency's regulations (see 2302090073). The court suggested a mandatory respondent's own data should be used in AD proceedings. "Following the trial court's logic, Commerce would be required to give what amounts to a separate rate to a government-controlled company" so long as the country is a top exporter from that nation and requests a review, "even though that company would not have qualified for a separate rate if it was not among the top exporters."

No part of the AD statute "makes exporters who are selected as mandatory respondents immune from the need to demonstrate independence from state control," the brief said.

In its opening brief, the government frequently pointed to the Federal Circuit's 2021 decision in China Manufacturers Alliance v. U.S., in which the court said that the China-wide rate, based on total adverse facts available, can still apply to a cooperative respondent (see 2106100044). The U.S. said there is no "meaningful distinction between" that decision and the present case, and the trade court "made no attempt to draw one." The principle of stare decisis mandates the reversal of CIT's ruling, the brief said.

The China Manufacturers Alliance decision saw the appellate court recognize that Commerce's NME policy "is a valid method or procedure for Commerce to make an individual rate determination under the statute," the brief said.

CIT said that since mandatory respondents serve as the grounds for setting a rate for non-individually investigated respondents, calculating a rate for each mandatory respondent using its own data "becomes all the more important in satisfying" the statute's accuracy requirement. In response, the U.S. said that using the China-wide rate for respondent Jilin Forest Industry Jinqiao Flooring Group as part of an AD review of multilayered wood flooring from China would actually be "more accurate" since it allows for the "potential manipulation of price or production" from the Chinese government.

"Using a rate calculation method that facilitates the ability of a NME government to manipulate prices and production actually undermines Commerce’s goals of determining an accurate weighted-average dumping margin," the brief said. The government added that the NME policy is "logical" since it "helps [avoid] the contradictory situation where a firm controlled by a NME-entity has a different rate from the NME-entity itself," while also preventing "gamesmanship by NME countries by ensuring that all entities under NME-government control receive the NME-wide rate."