Thai Wheel Exporter, Importers Roll Into CAFC to Challenge Loss at CIT
A Thai wheel exporter and three importers filed their opening bid at the U.S. Court of Appeals for the Federal Circuit challenge a trade court ruling that their products, wheels made with some Chinese-origin components, originated from China rather than Thailand (Asia Wheel Co. v. United States, Fed. Cir. # 25-1689).
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The plaintiff-appellants, led by exporter Asia Wheel, deal in wheels that are primarily made up of two components: rims and discs. Asia Wheel brought its case in 2023 arguing that its products, which were made with either a rim or disc from China, but not both, shouldn’t be covered by antidumping duty and countervailing duty orders on Chinese-origin wheels (see 2312010047).
Explicitly, the AD/CVD orders cover “rims, discs, and wheels that have been further processed in a third country, including, but not limited to, the painting of wheels from China and the welding and painting of rims and discs from China to form a steel wheel[.]" In February, Court of International Trade Judge Gary Katzmann found that Asia Wheel’s products were subject to them despite the exporter’s argument that they only covered wheels made of both “rims and discs from China,” explaining that ruling otherwise would render meaningless the inclusion of the phrase “including, but not limited to” in the orders’ language (see 2502210039).
In its CAFC brief, filed June 23, Asia Wheel disagreed. It also argued that its importers hadn’t been given enough notice that their wheels could be subject to the orders.
Again, the exporter said that an interaction between the orders’ petitioner and a mandatory respondent during the original investigation demonstrated that the orders were drafted to cover only wheels with both rims and discs from China (see 2406040046). But the trade court “misread” the Commerce Department’s final scope decision memo from the investigations, “relying on isolated statements out of context,” it claimed.
In that memo, the department told two importers that it wouldn’t change the language of the orders, as requested, because “the existing language sufficiently conveys the concept that third-country processing of a steel wheel must be of rims and discs produced in China,” Asia Wheel said, quoting the department.
“If it were unnecessary for both the rims and discs of third-country origin trailer wheels to originate from China, Commerce would not have used the word ‘must’ -- but it did,” the exporter said.
It acknowledged that the department went on to say that it wasn’t foreclosing future substantial transformation analyses for third-country processing of “a mix of rim and disc parts from China and a third country,” but said that wasn’t relevant.
First, Commerce may always use the substantial transformation framework in scope rulings when specific facts call for it, the exporter said. Second, this was a reference to “parts,” not to completed rims and discs, it claimed, “because Commerce expressly addressed this scenario during the investigations.”
CIT ignored this important context in its ruling, Asia Wheel argued. It said the trade court also misunderstood Commerce’s statement to the two importers -- that “the existing language sufficiently conveys the concept that third-country processing of a steel wheel must be of rims and discs produced in China” -- as providing only an example of processing in another country that wouldn’t be enough to escape the AD/CVD orders’ scope. All parties agreed that wheels with both rims and discs from China were subject to the orders, the exporter said; Commerce’s statement, however, dealt with wheels made with either a rim or a disc from a different country.
And it disagreed with the trade court that Commerce, at the end of its investigation, clearly decided that “a sweeping decision for all wheels produced from mixed-origin components would ... be inappropriate.” The department never said that, the exporter claimed. Commerce even implied the opposite, stating it could “properly address issues concerning circumvention by incorporating the petitioner’s proposed clarification of the scope, subject to the minor change” following its interaction with the two importers.
Asia Wheel also said that, regardless, its importers hadn’t had fair warning that their purchases could be hit with 400% duties. It said that “[a]t most,” Commerce suggested at the close of the AD/CVD orders’ investigation that it might find third-country wheels with mixed-origin inputs fall under the orders after a substantial transformation analysis.
But Commerce was now attempting to apply the duties to merchandise entered before a scope inquiry was initiated, it said. This went against the holding in the 2020 CAFC case Tai-Ao Aluminum (Taishan) v. U.S., in which the court found AD/CVD were unlawfully assessed on an aluminum extrusion importer’s products retroactively after Commerce began a circumvention inquiry into one unrelated importer. In its initiation notice, the department only said that it “intends to consider whether the inquiry should apply to all imports of extruded aluminum products.”
The department’s statement in the Chinese wheels investigation that it “does not foreclose a further analysis of substantial transformation” was similar, and it similarly failed to provide adequate notice, Asia Wheel said.