Trade Group Says Commerce Failed to Apply AFA to Tire Exporter, Even When It Meant To
A domestic steel trade group brought a complaint to the Court of International Trade Feb. 7 alleging that a mandatory respondent in a tire antidumping duty review “was attempting to pass off an [non-market economy] entity as a market-economy entity” and should have been hit with adverse facts available (United Steel, Paper and Forestry International Union v. United States, CIT # 25-00004).
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It also said the Commerce Department failed to actually apply AFA even after determining the exporter hadn't participated to the best of its ability in other instances, instead resorting to neutral facts.
The United Steelworkers labor union said in its complaint that it petitioned for an antidumping duty investigation on truck and bus tries from Thailand. The Commerce Department agreed and initiated the investigation, selecting exporter Prinx Chengshan Tire as a mandatory respondent.
Prinx is only one subsidiary within a group of consolidated companies, and “Commerce’s practice is to calculate [financial expense ratios] based on the audited financial statements of the company at the highest level of consolidation available,” United Steel said. However, the department won’t use financial statements that come from companies in non-market economies, it said.
In its initial questionnaire response, Prinx “attempted to report its financial expense ratio on the basis of an NME entity,” the trade group said. Commerce issued a supplemental questionnaire ordering the exporter to switch to using a market economy entity, but Prinx instead switched to a different non-market economy entity while “falsely claiming” it was following instructions, United Steel said.
The trade group said it pointed this out to Commerce, which agreed, holding in its final determinations that Prinx’s statements still originated from an NME entity. But the department refused to use AFA, instead resorting only to neutral facts available.
“Commerce thus ignored the purpose of the AFA statute to create an inducement for respondents to cooperate to the best of their ability,” it said.
Instead, Commerce should have doubled the financial expense ratio reported by the review’s other mandatory respondent, it argued.
And the department should have also properly applied partial adverse facts regarding Prinx’s warranty expenses after it found Prinx hadn’t acted to the best of its ability when it “failed to report a warranty claim expense granted to a U.S. customer,” the trade group said.
Though it intended to use AFA, Commerce ended up using facts that “were not actually adverse to Prinx,” resulting only in a neutral substitution, it claimed.
Commerce made the same error in regard to Prinx’s reported sales expenses, for which the exporter was also supposed to be hit with AFA after failing to report bank charges stemming from a U.S. customer’s payments, it said. But the department again selected neutral facts instead when it “merely increased Prinx’s direct selling expense by the amount of the unreported expense to the single customer,” the trade group claimed.