Commerce Can’t Require Review Respondents to Break the Law, Exporter Says

Commerce’s “further suggestion” that the exporter “should simply have never exported in the first place” if it couldn’t provide all of the information the department was seeking was likewise legally flawed, it said.

The exporter pushed back against the Commerce Department’s continued justification on remand of its use of partial adverse facts available in a review of Japanese-origin hot-rolled steel flat products, which cited the lack of cooperation of one of Nippon Steel’s home market affiliates (see 2501090065). Court of International Trade Judge Stephen Vaden, when he ordered the remand in October, had told the department it hadn’t properly considered Japanese law’s prohibition on an exporter contractually obligating cooperation from its affiliates (see 2410110043).

In its remand results, the department argued that U.S. law “does not contain a reporting exception to an antidumping duty questionnaire based on foreign government legal restrictions.”

This wasn’t true, Nippon Steel asserted.

“The Remand Order expressly directed the Department to respond to NSC’s analysis demonstrating that threatening Japanese affiliates to provide data would be prohibited by Japanese law,” it said. “If the Japanese law prohibition was irrelevant, the Court would not have remanded for the Department’s failure to consider it or ordered the Department to respond to it.”

It said Nippon Steel was only required to comply with Commerce’s requests “to the best of its ability” -- but breaking Japanese law wasn’t within the exporter’s ability.

The department also “cryptically” stated in its remand determination that “Nippon made a choice to export merchandise to the United States and must abide by U.S. laws[, and] [t]here is no fundamental or Constitutional right to import products into the United States,” seeming to imply that exporters that can’t meet all of Commerce’s requests for information can never act to the best of their ability unless they “never exported the goods in the first place,” the exporter noted.

This would have “absurd policy implications,” it said, as exporters can’t always know an affiliate will refuse to cooperate with Commerce when first beginning to export goods to the United States.

It also pushed back on Commerce’s argument that doing what the department was asking wouldn’t actually violate Japanese law.

The law, an antitrust measure, prohibits “dominant parties from threatening affiliates as a means of doing business,” the exporter said. Because of the law, it couldn’t make cooperation with the United States’ Commerce Department a requirement for doing business with Nippon Steel. Nor could it simply renegotiate its contract or find a different affiliate, as Commerce had suggested, because the same problem would still arise, it said.

The department concluded that the Japanese law “applies only to ‘unjust’ uses of economic power, and therefore not to the ‘legitimate, normal business practice of responding to data collection for the purpose of an antidumping duty proceeding,’” but this “confuses means and ends,” Nippon Steel said. In other words, Nippon Steel wasn’t allowed to threaten its affiliate “with cessation of doing business” even if the end, data collection, was “itself permissible,” it said.

The law actually prohibits a dominant party requesting the smaller party to expend resources when either the cost of doing so can’t be “calculate[d] in advance” or outweighs the “direct benefit” the smaller party would receive in return, Nippon Steel said.

And the law even depicts, as an example of prohibited behavior, “[a]n entrepreneur request[ing], and caus[ing] a transacting party to dispatch employees, etc., of the transacting party to engage in operations that only benefit the entrepreneur without paying the expenses for the dispatch,” the exporter said.

“The bottom line is straightforward,” it said. “Because forcing the affiliate to provide downstream sales data imposes a disadvantage on the affiliate that it could not calculate in advance and that exceeds reasonable limits, such threats constitute abuse of NSC’s superior bargaining position.”

Simply switching affiliates because one refused to cooperate with Commerce would still represent an implicit threat against that affiliate, which is also barred under the law, it added.

And the exporter further noted Nippon “went to some lengths” to provide as much information as possible to Commerce to make up for its affiliate’s lack of cooperation; it “hired local Japanese counsel solely for the purpose of assisting with data collection, began requesting data from its affiliate even before the Department initiated this review, offered suggestions on how the affiliate could provide the data, and made multiple written requests and telephone calls to the affiliate.”

It also provided Commerce all of its communications with the uncooperative affiliate to prove it had done its best to secure cooperation, it said.

But, although Vaden specifically ordered Commerce to consider these “additional data collection efforts” in its remand results, they went ignored, Nippon Steel said. Instead, the remand “merely reiterate[d]” that the exporter should have simply renegotiated its contract with its affiliate or looked elsewhere.

“It is patently unreasonable for the Department to expect that NSC could have or should have done more in this case,” it said.