Downstream Pipe Products Covered by AD Order on Mexican Pipes, Commerce Repeats on Remand
After a remand, the Commerce Department continued to find the downstream products of Mexican pipe exporter Maquilacero S.A. de C.V. and auto-parts manufacturer Tecnicas de Fluidos S.A. de C.V. (TEFLU) were covered by an antidumping duty order on light-walled rectangular pipe and tube (Maquilacero S.A. de C.V. v. U.S., CIT Consol. # 23-00091).
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The department said the language of the order was ambiguous as to whether it included downstream products of Maquilacero’s pipe. It didn’t revisit the issues Court of International Trade Judge Jennifer Choe-Groves chose to defer for later in her remand order.
TEFLU and Maquilacero were collapsed into a single entity as part of the AD review. Commerce also initially determined that finished downstream products the two entities sold to automotive equipment manufacturers were covered under the AD order because they “share basic chemical and physical characteristics” with in-scope merchandise, saying that the ultimate end use of those downstream products didn’t matter.
Choe-Groves rejected that argument and remanded because those characteristics alone aren’t enough, she said; she explained that further processing can result in merchandise “fall[ing] out of the ambit of an order” (see 2410070010). She held Commerce’s finding, based on the “silence” of the order regarding downstream products, went against the “well-established principle” that goods are only in-scope if an order’s language can be reasonably interpreted as including them. She also found the department’s analysis of k(1) factors to be insufficient.
In its new results on remand, Commerce said it determined that the downstream products were still covered by the AD order. First, it said, the language of the scope order was ambiguous with regard to inclusion of downstream products. It therefore looked to k(1) factors to make its final ruling.
It said that Choe-Groves had ruled that the order’s plain language doesn’t address pipe that has been further processed elsewhere.
“Accordingly, we find the plain language of the scope to be ambiguous with respect to TEFLU’s specific products as it includes no language concerning further processing or downstream products,” it said. “Therefore, we are no longer relying on the scope language’s silence.”
Considering k(1) factors, the department said the order’s petition also didn’t touch on downstream light-walled pipe. But the International Trade Commission’s second review, “the most recent ITC publication at the time of Commerce’s instant review addressing the Order and the LWRPT industry more broadly,” considered further processed products in its injury investigation for Mexico, it claimed.
It also said prior scope determinations also support its conclusion. For example, it said, the exporter Productos Laminados de Monterrey “identified direct sales to automotive and original equipment manufacturers (OEM) and furniture producers as a channel of distribution” and “requested Commerce alter the physical characteristics of LWRPT … to account for the further processing of LWRPT as subject merchandise.” It called this “an example where another respondent reported further processed products as subject to the Order.”
And it looked to the physical characteristics of the relevant products, determining that they were identical to products covered by the scope of the order.
Next, the department said that it was impossible to draw a line distinguishing when a product has been processed to an extent sufficient to remove it from the order’s scope. The record evidence provided by Maquilacero and TEFLU wasn’t enough, it said.
“For instance, the record does not indicate how LWRPT with a single hole drilled into it and labelled as an automotive part based on the prescribed end use intended by that processing, or a product with a single bend, should be compared to a product undergoing many such customizations and processing steps,” it said.
For example, it said, the two entities described further processing as including “saw-cutting, laser cutting-to-length, drilling, perforation and/or bending” and listed one or more of those operations in a brochure next to pictures of products. But, “based on context,” the brochure “appears to include products not made from LWRPT.”
And it said that it was concerned about the potential for circumvention if further processed products weren’t included in the scope of the order. This concern was echoed in the U.S. Court of Appeals for the Federal Circuit case Saha Thai, which said that “exclusion of this kind would ‘take the teeth out of antidumping duty orders, depriving the domestic industry of the very relief from harm posed by unfairly traded imports,’” it claimed.