Vehicle Parts Importer Misinterpreting AD/CVD Orders It Sought, US Says
The U.S. said Nov. 22 that a vehicle parts importer “misrepresented multiple primary sources” when it argued that, as a petitioner for antidumping and countervailing duty orders on chassis from China, it hadn’t intended Chinese-origin components used in chassis from another country be included (see 2403070060) (Pitts Enterprises, Inc. v. U.S., CIT # 24-00030).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
In any case, Commerce didn’t need to look at those primary sources because it didn’t need to conduct a k(1) analysis; it only needed to look to the plain language of the orders, the U.S. said.
U.S. importer and manufacturer Pitts Enterprises said in a March motion for judgment that it is "predominately” a domestic manufacturer of vehicle chassis, but, “to respond to the need to strengthen the U.S. logistics chain,” it had begun importing additional Vietnamese chassis that included Chinese-origin axle and landing gear components. As a member of the Coalition of American Chassis Manufacturers, it also had -- after it began importing the Vietnamese chassis -- been a petitioner for the AD/CVD orders on chassis and subassemblies thereof from China.
When Pitts filed a scope ruling regarding its Vietnamese chassis, the Commerce Department found them to be included under the orders. Pitts argued this was in contravention of the orders’ language because the axle and landing gear components were neither assemblies nor subassemblies and because it had sought the orders “specifically … to not cover individual Chinese components alone which are parts used in the integrated production of chassis.” It claimed this had been confirmed at the time of the orders’ drafting by its trade coalition.
Although k(1) sources didn’t need to be consulted because the plain language of the orders was enough for Commerce to reach its determination, Pitts was also misinterpreting them, the government said in its Nov. 22 brief.
It said Pitts relied on four documents to make its argument to the contrary: a petitioner’s supplemental questionnaire, a preliminary scope memo, the final injury determination by the International Trade Commission and a scope ruling from a separate matter. Commerce discussed all of these in its scope ruling, the government said.
First, it said, “Pitts relies on documents from the early stages of the investigation, when Commerce was first determining how to clarify the scope language.”
It agreed that Pitts’ petitioner coalition said originally that it didn’t intend for individual components to be covered by the orders. But the coalition later agreed to the final language of the orders, which did exactly that so long as the components are entered “for further assembly with a finished or unfinished chassis,” it said.
ITC’s injury determination likewise found that individual components weren’t covered by the orders unless they were intended to be used in chassis.
In the other scope ruling, which was the only other inquiry on the orders’ specific language, Commerce found that the wheel caps that were at issue were exempt because they were both sold to the U.S. as components and because they weren’t used in chassis assembly, it said.
But looking into the k(1) sources isn't even necessary, as the orders “expressly address the importation of subassemblies, whether assembled or unassembled, and state that such merchandise is subject merchandise,” the U.S. said.
The plain language of the orders also shows that “further processing in a third country” of the subassemblies doesn’t exempt them from the orders’ scope, it said, as the orders explain that “inclusion of other components not identified as comprising the finished or unfinished chassis does not remove the product from the scope.”
Pitts said in its brief that the orders’ definition of “subassemblies” excluded its Chinese-origin axle and landing gear components. But those components are actually “unassembled subassemblies,” which the orders cover, the U.S. said.
Calling Pitts’ interpretation of the orders “cherry-picked,” it said the orders cover “components entered with or for further assembly with a finished or unfinished chassis,” particularly mentioning axles and landing gears as examples of those components.
Pitts, it claimed, was arguing that its subassembly components couldn’t be considered “unassembled subassemblies” because they were each entered independently to Vietnam. But the definition of “unassembled” is “not connected or put together,” according to Merriam-Webster, it said.
“To ‘assemble’ components does not require that such components enter together, as in a kit,” it said. “By the plain language of the Orders, when the disparate components of a particular subassembly, such as an axle assembly, are collectively imported for the purposes of fitting them together, then they are an ‘unfinished chassis.’”
To find otherwise would result in a “significant loophole” in the orders because manufacturers or importers could just import “full chassis or subassemblies as separate shipments of components against the petitioner’s intent,” it said.
And the U.S. said that Pitts was wrong that Commerce ignored an exemption explicit in the orders’ scope.
In full, it said, that exemption explained that “individual components entered and sold by themselves are not subject to the investigations, but components entered with or for further assembly with a finished or unfinished chassis are subject merchandise.”