US Says Commerce Fully Supported Circumvention Finding on Importer's Steel Wire From Mexico
The Commerce Department fully supported its finding that importer Deacero's pre-stressed concrete steel wire (PC) strand circumvented the antidumping duty order on PC strand from Mexico, the U.S. argued in a July 23 reply brief at the Court of International Trade. The government said Commerce fully supported its comparison of Deacero's U.S. and Mexican production facilities, finding that Deacero's PC strand production process is "minor or insignificant," and determination that Deacero's sourcing of inputs from its Mexican affiliates supported a circumvention finding (Deacero v. United States, CIT # 24-00212).
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In support of the circumvention determination, the U.S. said Commerce based its analysis in part on Deacero's own reporting, "which established that Deacero performs all aspects of PC strand production in Mexico," making the comparison of the company's U.S. and Mexican facilities appropriate. The government said the finding is in line with 19 U.S.C. Section 1677j(a).
Neither this statute, nor the Statement of Administrative Action Accompanying the Uruguay Round, "explicitly proscribe Commerce from comparing a process of assembly or completion in the United States against a more comprehensive process of manufacture outside the United States," the brief said. The SAA actually leaves the choice of methodology within Commerce's discretion, the government argued.
Both CIT and the U.S. Court of Appeals for the Federal Circuit actually upheld this "same comparative analysis as reasonable and consistent with the statute" in Al Ghurair v. U.S., the government noted. In that case, the trade court said this analysis of "the total sum of investment is useful to gauge the level of investment ... in a third country."
While Deacero says the CAFC decision is "inapposite," since it applies to 19 U.S.C. Section 1677j(b) as opposed to Section 1677j(a) (see 2505270002), the U.S. said there's "hardly any distinction in the law or in the SAA between the two provisions." The entire text of Section 1677j(a)(2), "which establishes the criteria used to determine whether a production process is minor or insignificant, is identical to that" of Section 1677j(b)(2), save for the term "United States" in place of "foreign country."
The statutes impose "the same general requirements with only minor differences to account for further assembly in the United States as opposed to a foreign country," the brief said.
Deacero argued that Commerce's application of the statute isn't consistent with the direction of the SAA, since the SAA is only meant to address "stereotypical circumvention" scenarios such as "screwdriver assembly" operations. However, the trade court has dismissed this claim before, and the court should dismiss it again here, the U.S. said. "The statute unambiguously states the criteria by which Commerce is to assess in determining whether a production process is minor or insignificant," the brief said.
The importer also challenged Commerce's finding that Deacero's PC strand production process is minor or insignificant, though the government said its claims are "largely duplicative of its challenges to Commerce’s broader circumvention methodology." For three of the factors, "the level of investment, the nature of the production process, and the extent of the production facilities," Deacero tries to explain why Commerce's finding would have been erroneous had Commerce compared Deacero's U.S. production to one step of Deacero's production process of PC strand across its Mexican facilities, the brief said.
"Deacero’s arguments in this respect are moot because, for each of these factors, Commerce compared Deacero’s production process in the U.S. to the production process for PC strand in Mexico," the government argued.
Where Deacero challenges the merits of Commerce's factual findings, the U.S. said the importer's "arguments are inadequately developed and should be deemed waived." For instance, regarding the level of investment, “Deacero simply asserts that its investments in its sole U.S. facility ‘weigh against a finding that its U.S. process is “minor or insignificant,”’” the brief said. Deacero doesn't engage with Commerce's "factual findings at all," but instead lays out what Commerce should have done. Deacero never addresses whether Commerce's finding is in line with the relevant statutory provisions or supported by substantial evidence, the brief said.
Lastly, the government argued that Commerce properly supported that Deacero's sourcing of inputs from its Mexican affiliate supported the circumvention finding. The agency made this decision under Section 1677j(a)(3)(C), which requires Commerce to consider "whether imports into the United States of the parts or components produced in such foreign country have increased after the initiation of the investigation which resulted in the issuance of such order or finding."
Commerce found this provision isn't time-limited and doesn't require Commerce to find only whether imports increased "immediately" after the start of the investigation, the U.S. noted. Deacero claims that Commerce used an improper comparison period and failed to account for contrary evidence, though it doesn't contest Commerce's determination that imports increased, the brief said. However, "the use of this comparison period was entirely reasonable in light of petitioners’ allegation, and not 'results-driven' as Deacero argues," the U.S. said.