Specificity Finding for Currency Undervaluation Subsidy Not in Line With Statute, Exporter Says

Responding to Commerce's remand results, Kumho Tire said that to give meaning to the statutory language, a finding of "predominant use" must consider whether the "predominance" stems from a "discriminatory preference for one enterprise or industry over another rather than from the sheer size of the group." The exporter added that the evidence doesn't support Commerce's claim that Vietnamese authorities depreciated the dong to boost demand for exported consumer goods.

In 2024, the trade court said Commerce had the authority to countervail currency undervaluation, though it remanded the CVD rate imposed on exporter Kumho Tire in the countervailing duty investigation on passenger vehicle and light truck tires from Vietnam (see 2410280035). The court told the agency to specify whether it made the assumption in its specificity determination that the use of the currency undervaluation subsidy is spread evenly in the traded goods sector.

On remand, Commerce said this question is irrelevant, since it only matters whether a subsidy is disproportionately used by a given industry and not whether the subsidy is spread unevenly within the industry (see 2501160060). The agency said Kumho Tire's "real complaint" is that a group made of exporters is too large compared with the economy as a whole.

Responding to comments on the remand results, Kumho Tire said the agency can't ignore the court's remand instructions. "Commerce’s failure to address the issue raised by the Court’s decision, by itself, requires a further remand," the brief said, additionally taking issue with the agency's conclusion that the subsidy is specific to the traded goods sector since 72% of its benefits go to this sector. The respondent argued that this interpretation would "render the statutory provisions concerning identification of de facto specificity meaningless."

The exporter argued that it's "always possible to define a 'group' of industries in a manner that will find the group to be the predominant user of a subsidy program." If one particular industry isn't enough to be a "predominant user," Commerce could always keep adding industries to its "group" until the "total usage by all members of the group totaled more than 50 percent of total usage," the brief said. Kumho Tire argued that this court has previously said that Commerce can't use its discretion to define "groups" so "broadly as to render meaningless the statutory language concerning 'disproportionate' use of a subsidy program."

On remand, Commerce also said that the Vietnamese government managed the Vietnamese dong relative to the U.S. dollar to give exports a competitive advantage, increasing net foreign reserve purchases in late 2019 to make Vietnamese goods cheaper in the U.S. market. In response, Kumho Tire said this claim isn't supported by substantial evidence, since even Commerce acknowledged that the Vietnamese government "intervened in currency markets" in late 2018 to support the dong's value "amid downward pressure, which would have otherwise made Vietnamese products cheaper in the United States."

In early 2019 as "global financial conditions eased and holiday-related remittances rose," the Vietnamese government "transitioned to purchasing foreign exchange, with net purchases in the first half of 2019 modestly surpassing net sales over the prior six months," the brief said. As a result, the Vietnamese government's management of the dong during the review period was "a response to market developments to stabilize the currency's value, rather than an attempt to engineer a competitive advantage for Vietnamese exports," the brief said.