CIT Faults Commerce for Only Picking 1 Respondent in CVD Review on Chinese Wood Flooring

Reif also remanded Commerce's decision to include data from Harmonized Tariff Schedule category 4412.99 in the benchmark calculation for the provision of plywood for less than adequate remuneration (LTAR) and the agency's calculation of the benchmark regarding the provision of veneers for LTAR.

The court sustained Commerce's continued use of the individually calculated CVD rate for Jiangsu Guyu despite deselecting it as a mandatory respondent, finding of cross-ownership between Jiangsu Guyu's affiliates, inclusion of poplar core sheets in the provision of veneers for LTAR program, investigation of non-alleged subsidies, use of adverse facts available to make its specificity determination and benchmark calculation regarding the provision of electricity for LTAR, use of AFA to find that Jiangsu Guyu's poplar core sheet authorities are government "authorities," and use of AFA regarding China's Export Buyer's Credit Program.

The review was once before the trade court and was previously remanded due to errors in the data Commerce used to pick its two mandatory respondents. On remand, the agency deselected Jiangsu Guyu as a mandatory respondent. However, after this remand, the U.S. Court of Appeals for the Federal Circuit said in YC Rubber Co. v. U.S. that Commerce can't use just one mandatory respondent where multiple companies have requested a review.

As a result, the agency asked for a voluntary remand but ultimately said that it could proceed with just one respondent. Commerce justified this position on the grounds that adding another respondent at this stage would pose too large an administrative burden and that the remaining respondent was properly representative of all exporters.

Reif rejected this position, finding that YC Rubber compels the selection of another respondent and that both of the agency's justifications fail. The judge noted that the agency was left with one respondent "only because Commerce failed at the outset of its investigation and thereafter" to consider evidence that contested the reliability of the data it used in picking its respondents. Various parties, including both the petitioner and the respondents, questioned the data, which "should have been an even brighter red flag to Commerce," the court said.

The judge said the court is "disappointed that Commerce has now allowed this error to fester."

The petitioner also argued that Commerce was required to include Jiangsu Guyu's individually calculated rate in the calculation for the non-selected companies' rate, while Jiangsu Guyu contested the agency's determination that it could still use the individual rate for the exporter despite deselecting it as a mandatory respondent. Reif rejected both of these arguments, first finding that the agency appropriately excluded Jiangsu Guyu's rate from the all-others rate, since the initial selection of the company wasn't correct. Reif said the "structure of the statute limits the exporters or producers that Commerce may use in calculating the all-others rate."

Reif then said Jiangsu Guyu was properly still assigned its individually calculated rate, finding that no company has the right "not to be subject to review or individual examination." The statute says the all-others rate only applies to those that aren't individually investigated, and "Jiangsu Guyu does not dispute that it was individually investigated," the court said.

The court then turned to the question of whether Commerce properly supported its finding of cross-ownership between Jiangsu Guyu's affiliates Shengyu, Shunyang and Soyuan. During the review, the exporter represented that these parties were affiliates, only later saying they aren't cross-owned affiliates, since only a simple family relationship exists between the shareholders. Reif held that "Jiangsu Guyu failed to explain the reasons that it represented to Commerce previously and repeatedly that the companies were cross-owned."

Respondent Baroque Timber then challenged the use of HTS category 4412.99 data in the benchmark for calculating the provision of plywood for LTAR program. Baroque said use of the data isn't supported, since the data wholly consists of "products that Baroque did not purchase." HTS category 4412 covers plywood, veneered panels and similar laminated wood.

The agency said that Baroque failed to offer enough evidence to show that imports into China under HTS 4412.99 are "categorized as laminated wood of the type not used as an input into the production of wood flooring." Commerce noted that the Chinese description of 4412 suggests that plywood is, or can be, laminated and that the UN Comtrade description of HTS 4412.99 "explicitly excludes particle board, differentiating it from other potential wood flooring inputs."

The court rejected Commerce's finding that "all plywood is a laminate structure," which would mean that HTS 4412.99 covers goods comparable to Baroque's plywood, since the record shows that "plywood" and "laminated wood" are "distinct products covered by distinct H[T]S subcategories." Reif added that "record import statistics showing that imports into China during the POR under H[T]S 4412.99 consisted of laminated wood, among other material, not plywood." The judge said Baroque "submitted uncontroverted data" that it dind't use goods covered by HTS 4412.99.

The judge then sustained Commerce's inclusion of poplar core sheets in the provision of veneers for LTAR program, which Jiangsu Guyu contested on the grounds that, fundamentally, poplar core sheets are not veneers. While Reif held that Commerce permissibly said poplar core sheets qualify as veneers, the judge remanded the agency's benchmark calculation for the program.

Commerce pointed to the scope of the order in making its decision, finding that "plywood and veneers are two distinct wood inputs" and that veneers are "thin slices of wood" while plywood is "assembled veneers." The agency said that the veneers for LTAR program isn't limited to a "specific species or type of veneer" and that "the petitioner isn't required to provide every type of potential veneer species in its benchmark submission."

Importer Fine Furniture contested the benchmark calculation for the veneers for LTAR program on the ground that it used data for HS subheadings that cover face-grade veneers and not poplar core sheet, which is subject to different benchmark prices. Reif said he didn't have a basis to find whether Commerce's calculation of the subsidy rate here is backed by sufficient evidence.

In particular, the agency didn't explain the reasons the "other species" of veneers included in its benchmark data satisfied the agency's obligation to "measure the adequacy of remuneration 'in relation to prevailing market conditions for the good or service being provided,'" the decision said. Reif dubbed Commerce's analysis "conclusory."

The court then sustained Commerce's investigation of other non-alleged subsidies, finding there to be no limit in the statute or regulation "on Commerce’s ability to inquire into the existence of 'other subsidy' programs during an investigation or review."

Reif shifted to a discussion of the CVD for the provision of electricity for LTAR. In the review, Commerce used AFA to make its specificity determination and make its benchmark calculation due to the Chinese government's failure to submit requested information on the role of the National Development and Reform Commission. The Chinese government didn't turn over the requested information, claiming that the commission no longer has a role in setting the prices of electricity and can't review electricity pricing in Chinese provinces.

The court said Commerce properly used AFA here based on a record that "indicates that the GOC controls electricity pricing, and the GOC failed to provide to Commerce the information that Commerce required to analyze fully how electricity pricing is set in China." Reif then supported Commerce's benchmark calculation, which the court said it has done previously "on numerous occasions."

Turrning to the question of whether Jiangsu Guyu's poplar core sheet suppliers were government authorities, Reif upheld Commerce's use of AFA in answering this question. The judge said the agency adequately found there to be a gap on the record, since the Chinese government failed to provide information about the suppliers. The Chinese government said it was never asked to give this information, since the agency didn't find that poplar core sheets were veneers until later in the review.

The court said Commerce "concluded reasonably" that the record had Shunyang's poplar core sheet purchases, "which included its supplier information, and the GOC had the information it needed to provide Commerce" with the requested supplier information. The agency also properly used AFA to find the suppliers to be authorities, the judge said. There's no limit in the statute barring Commerce from using AFA to find that the suppliers are authorities, the decision said.

Lastly, Reif sustained the use of AFA regarding China's Export Buyer's Credit Program. The judge laid out his framework for assessing EBCP claims, ultimately noting that the respondents failed to submit enough evidence of non-use of the program, since they didn't submit non-use certifications from all of their suppliers.

(Jiangsu Senmao Bamboo and Wood Industry Co. v. United States, Slip Op. 25-28, CIT Consol. # 20-03885, dated 03/24/25, Judge: Timothy Reif; Attorneys: Stephen Brophy of Husch Blackwell for plaintiffs led by Jiangsu Senmao Bamboo and Wood Industry Co.; Adams Lee of Harris Bricken for consolidated plaintiff Zhejiang Dadongwu GreenHome Wood Co.; Gregory McCue of Steptoe for consolidated plaintiffs Struxtur and Evolutions Flooring; Francis Sailer of Grunfeld Desiderio for consolidated plaintiffs Baroque and Riverside Plywood Corp.; Mark Ludwikowski of Clark Hill for plaintiff-intervenors led by Shenzhenshi Huanwei Woods Co.; Kristin Mowry of Mowry & Grimson for consolidated plaintiff Fine Furniture; Brittney Powell of Fox Rothschild for consolidated plaintiffs led by Metropolitan Hardwood Floors; Kelly Geddes for defendant U.S. government; Timothy Brightbill of Wiley Rein for defendant-intervenor American Manufacturers of Multilayered Wood Flooring)