No Difference in Anti-Circ Cases on Goods Processed in US vs. Third Countries, Petitioner Says

Steel wire importer Deacero argued in a May 19 motion for judgment that a circumvention finding regarding its products, made under 19 U.S.C. 1677j, would let the department impose duties on intermediate steel products in a way that would endanger investment in U.S. manufacturing (see 2505270002). The provision governs circumvention inquiries on products that undergo further processing not in third countries, but in the United States; Deacero explained it produces its own steel wire in the U.S. using inputs from Mexico.

In its brief, Deacero claimed that Commerce wrongly reached its circumvention finding by comparing the actual production process the importer’s wire undergoes with a hypothetical “complete” production process stretching back to raw iron and steel inputs. That comparison was unfair and overbroad, it argued.

But, first, “Deacero is unable to cite a single statute, regulation, or case that says Commerce is precluded from using this methodology to determine whether the further processing in the United States is ‘minor or insignificant’ under 19 U.S.C. § 1677j(a)(1)(C),” Insteel said in its Aug. 7 brief.

The petitioner said that Commerce’s approach to the circumvention inquiry was reasonable and meets the substantial evidence standard. Deacero’s argument, it said, relies on a “baseless distinction” between circumvention inquiries conducted on goods further processed in third countries and those further processed in the United States.

Nothing in the law supports the distinction Deacero was attempting to draw, Insteel said. It claimed Congress wrote the circumvention inquiry laws not to avoid deterring legitimate investment, as argued by Deacero, but rather to “‘restore confidence’ in the domestic industry injured or threatened with material injury in the efficacy of trade remedies and ‘thereby encourage’ the use of antidumping and countervailing duty laws ‘to their maximum potential.’"

It also said Deacero quoted “selectively” from the Uruguay Rounds’ Statement of Administrative Action in claiming otherwise, emphasizing that the statement doesn’t differentiate between circumvention inquiries on goods processed in third countries and goods processed in the United States.

First, it said, the importer quoted the SAA as emphasizing the law was intended to address circumvention while making certain that anti-circumvention inquiries “will not deter legitimate investment ....”

“But the full quotation from the SAA concerns both ‘assembly or completion operations in the United States or in third countries,’” Insteel said. “Any concern about ‘legitimate investments,’ accordingly, does not differentiate Commerce's considerations under section 781(a) and 781(b).”

Deacero also claimed that the legislative history of 19 U.S.C. 1677j(a) specifically indicates Congress meant circumvention inquiries on U.S.-processed products to consider primarily “the nature of the process performed in the United States,” Insteel said. But, again, “[t]he full sentences from the legislative history fail to draw any distinction between Congress's intent with regard to” processing conducted in third countries or the United States.

In a footnote, Insteel further argued that the government has also “expressed a particular aim to discourage repeat offenders from skirting trade remedies.” Deacero, it said, “exemplifies this very behavior the United States Government has long sought to combat.” It cited notices imposing antidumping duties, countervailing duties or both on Deacero’s various imports of wire rod, PC strand, steel concrete reinforcing bar, galvanized steel wire and wire mesh from Mexico.