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US Tells CAFC No Need to Reopen Chinese Tire Exporter's Separate AD Rate Claim

The U.S. told the U.S. Court of Appeals for the Federal Circuit to "refuse to reopen" the issue of exporter Double Coin's eligibility for a separate antidumping duty rate in a suit returned to the appellate court after the company failed to raise the issue on its first visit to the Federal Circuit (China Manufacturers Alliance v. United States, Fed. Cir. # 23-2391).

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Filing a reply brief on Feb. 7, the government told the court it already ruled that the use of the 105.31% China-wide rate in the 2012-13 AD review on off-the-road tires from China was reasonable on the facts. However, should the court address the merits of Double Coin's claims, the U.S. argued that Commerce reasonably found that the Chinese government held majority ownership in Double Coin via the state-owned Shanghai SASAC and Shanghai Huayi (Group) Company.

Double Coin's arguments to the contrary fail since they don't undermine the fact that Huayi's majority ownership allows it to appoint members of the exporter's board, which appoints the general manager in charge of the company's day-to-day operations, the brief said.

Double Coin's first foray at the Federal Circuit in challenging the review made waves after the appellate court ruled that Commerce could use the China-wide rate on a fully cooperative respondent that fails to rebut the presumption of government control (see 2106100044). After the suit returned to the trial court, the issue became whether the company actually rebutted the presumption of state control. Commerce said it didn't, which the Court of International Trade upheld.

Now back at the Federal Circuit, the U.S. is urging the court to avoid ruling on the issue altogether since "the Court's mandate did not preserve the issue on remand and Double Coin did not raise the issue as an alternative basis for affirmance during the first appeal."

Procedural issues aside, the exporter argued that Commerce failed to follow the correct "legal test," which requires the agency to focus solely on a company's "export" activities. The U.S. responded that the agency has four factors for analyzing state control, one of which is control over export activities. However, Commerce has clearly said that if a government entity holds a majority ownership share either directly or indirectly over a company, the majority ownership "in and of itself" means the government exercises control over its operation.

There is no dispute that Shanghai SASAC owns 100% of Huayi, which is Double Coin's majority shareholder. Since no other shareholder has more than 1% ownership in the exporter, it has "nearly complete control over shareholder decisions, including decisions that affect the management and operations of the company," the brief said. As a result, the company didn't rebut the presumption of state control, the government said.

Commerce doesn't need to weigh each of the four factors individually and can reject a separate rate for companies that fail to show separation from the foreign state "with respect to any one de jure or de facto criterion," the brief said.

Double Coin also claimed that so long as it offers any evidence to the contrary, it must have rebutted the presumption. The government responded that the most the company can offer is the "presence of evidence both favoring and detracting from its position," adding that this "is not enough." The possibility of coming to two different conclusions "does not prevent an administrative agency's finding from being supported by substantial evidence," the brief said.

The exporter also said its evidence shows that it sets its prices, negotiates and conducts export operations free from government control. The U.S. said this lacks merit for two reasons. The first is that it has never been the test that a Communist Party functionary must directly supervise export activities, as Double Coin claims. "If Double Coin were entirely owned by non-governmental shareholders and the evidence demonstrated that its board was, in fact, not beholden to the state, then, absent countervailing evidence, it might establish de facto independence. But the facts tell a different story," the brief said.