US Says Chinese Freight Rail Importer Misunderstands ITC Injury Investigation Law
In a 18,700-word opposition brief, the U.S. attempted to derail a full-throttle attack brought by importers Wabtec Corp. and Strato against the International Trade Commission’s affirmative injury finding for freight rail couplers from China (Wabtec Corp. v. U.S., CIT # 23-00157).
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 their August motion for judgment (see 2408200046), the importers said the ITC had been wrong to reverse course from a prior negative injury finding on the same merchandise -- a finding that arrived only a few weeks prior to the start of the most recent investigation. On a similar track, they also brought a motion in January challenging Commerce’s ability to begin an antidumping duty investigation two months after a reaching negative AD determination (see 2401230052).
In its Dec. 19 response, the U.S. argued first that the two investigations wasn't essentially the same, as the importer claimed, and the former wasn’t a review of the latter. Instead, the first and the second investigations involved “different petitions” initiated as “new investigations,” with the first looking at knuckles, coupler bodies, coupler yokes and follower blocks, and the latter at only knucklers and coupler bodies, it said. The first investigation also looked at only China, not Mexico, and determined that Chinese imports didn't harm domestic industry because most of the harm came from nonsubject Mexican imports.
It again pushed back against Wabtec’s reading of the changed circumstances review laws. Wabtec argued that the laws governing changed circumstances reviews proscribe any reviews initiated less than two years after the previous one examining the same products. But, among other things, the second injury determination was an entirely new investigation, not a changed circumstances review, it said.
The government also defended the ITC’s decision not to exclude one domestic producer’s data from its injury calculations. A domestic producer’s exclusion is left up to the ITC’s discretion and “traditionally” is based on five factors, it said: the proportion of U.S.-manufactured merchandise attributable to the producer, the reason the producer has begun importing, the distortive impact excluding the producer will have on the rest of the industry, the producer’s ratio of imports compared with manufactured products, and “whether the primary interest of the importing producer lies in domestic production or importation.”
Wabtec challenged the ITC’s failure to exclude a particular producer and importer, claiming that it meant the ITC had “shielded” the fact that the relevant imports hadn't harmed the domestic rail coupler industry. Even the producer itself had said it should have been excluded, Wabtec argued.
But the producer’s word wasn’t law, the government said. It said the ITC had reasonably chosen not to rely on what that producer said because it had changed tack during the proceeding, saying first that it was primarily not import-focused and then, later, that it was. Instead, the commission looked to the other traditional factors in its decision not to exclude the producer, the U.S. said.
And it defended the ITC’s decision to cumulate imports from China and Mexico. The petitions to look into rail couplers from each country were filed on the same day, and the products didn’t fall into any cumulation exceptions, it said.
The ITC had substantial evidence to back its determination, the government also said. It said several major financial indicators for the domestic industry dropped from 2020 to 2021. They rose from 2021 to 2022, but, at that time, the first investigation’s provisional duties had leveled the playing field, it said.
For example, the ITC “reasonably found that subject imports prevented [price] increases that would have otherwise occurred to a significant degree in 2020 and 2021,” it said.
Finally, the government claimed that Wabtec lacked standing and wasn’t entitled to relief with respect to the importer’s conflict-of-interest claim.
After one attorney for the petitioner of the second freight rail couplers investigation was found to have previously worked with the Mexican rail coupler exporter Amsted for the first, Amsted sought to have the attorney and his firm barred from further participation. The ITC refused, saying that it “does not adjudicate alleged violations of the Rules of Professional Conduct of a state Bar, nor does it determine whether conduct has violated the Model Rules of Professional Conduct of the American Bar Association.”
Though the U.S. Court of Appeals for the Federal Circuit hasn’t ruled on the issue, at least one other circuit court has held that only former clients can raise conflict-of-interest claims, it said.
Even if Wabtec could, the importer would have to show that the conflict was “so ‘manifest and glaring’ or ‘open and obvious’ that it ‘infected the proceedings,’” at least according to 5th Circuit precedent, the government said. It argued Wabtec couldn’t provide that level of evidence. Instead, the government said, Wabtec was simply attempting to “piggyback upon Amsted’s former attorney-client relationship” to challenge the ITC’s affirmative injury determination regarding Chinese imports.