Counsel for Chinese Exporters Say Commerce Inconsistent on Separate Rate Policy
An attorney for exporters China Manufacturers Alliance and Double Coin told the U.S. Court of Appeals for the Federal Circuit they were dropping their argument that it was a legal error for the Commerce Department to consider only one of four statutory factors in determining government control. The attorney, James Durling, was questioned by the appellate court during April 7 oral argument on his remaining point -- that the department’s decision to reject the exporters’ separate rate applications wasn’t based on substantial evidence (China Manufacturers Alliance v. United States, Fed. Cir. # 23-2391).
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Under the standard Commerce had been applying at the time of the underlying 2012-2013 administrative review, the department would look to more than just the fact that an exporter’s board was majority owned by the government to make a government control determination, he said. It also would consider other evidence regarding how export prices were set, he claimed.
In the case of Double Coin and China Manufacturers Alliance, no evidence actually showed that the Chinese government had any sway over export pricing, he said.
“At its crux, our argument about substantial evidence is that even though there was record evidence of independence, day-to-day independence about things like setting the U.S. prices, which is, by Commerce’s own terms, what they cared about … instead of considering that evidence, Commerce simply said, ‘Majority owned, we’re going to stop the analysis,’” Durling said.
“How is that a substantial evidence question?” CAFC Judge Todd Hughes asked. “That’s a legal question. So either its practice was correct as a matter of law, which we now know it was because we said so in Pirelli, or it wasn’t.”
Durling argued that Commerce said in its final determination that its contemporaneous practice had been to look at the impact of government majority ownership on export prices, citing how the determination “endorses the traditional view that the legal environment in China is permissive of independent actions about export activities.”
The government’s attorney, Stephen Tosini, acknowledged that Commerce’s determination stated the Chinese government’s majority ownership of the two exporters was sufficient to deny the exporters a separate rate. But it also “went further than that, because it looked at specific evidence on the record,” Tosini said.
He also stressed that the government was not forfeiting its argument about the mandate rule, although he said he believes the government’s “brief speaks for itself.”