2012 U.S. Court of International Trade decisions on Department of Commerce market economy trade remedy decisions.

Author:Nicely, Matthew R.
Position:2012 International Trade Review
 
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  1. INTRODUCTION II. EXHAUSTION OF ADMINISTRATIVE REMEDIES DOCTRINE III. ZEROING OF NEGATIVE DUMPING MARGINS IV. ADVERSE FACTS AVAILABLE V. COMMERCE'S INTERPRETATION OF THE SCOPE OF MERCHANDISE SUBJECT TO AN ORDER VI. MODEL MATCHING METHODOLOGY VII. COLLAPSING ENTITIES VIII. COST AND SALES EXPENSE CALCULATIONS IX. CONCLUSION I. INTRODUCTION

    Despite a recent increase in antidumping and countervailing duty investigations against non-market economy countries like China and Vietnam, the Department of Commerce (Commerce) every year conducts annual administrative reviews of existing orders against market economy countries, the final results of which are often appealed to the Court of International Trade (Court or CIT). Meanwhile, a handful of new investigations are brought against market economies each year, typically resulting in a few appeals. During 2012, the Court issued twenty-eight slip opinions reviewing Commerce antidumping decisions involving market economies, generating some important new law. While many of the issues reviewed by the Court in 2012 were quite similar, if not identical, to those pursued in prior appeals, the resulting decisions nonetheless expanded the body of law applicable to these kinds of cases. This Article addresses only the most important of the issues addressed by the Court involving market economies.

  2. EXHAUSTION OF ADMINISTRATIVE REMEDIES DOCTRINE

    During 2012, the CIT often held parties to the requirement that they exhaust administrative remedies before bringing action in the Court. (1) The Court was generally unsympathetic to parties that failed to give Commerce a chance to address an argument because the parties failed to raise it during the administrative proceeding. (2) Even where the claim may have had merit, the Court did not excuse the parties' failure to afford Commerce a chance to address the issue on its own. (3) Where the CIT applied the exhaustion requirement, it was guided by the doctrine's goal of affording the administrative agency the first opportunity to address an issue. Only those arguments raised in a timely manner would be considered. (4) The CIT generally recognizes exceptions to the exhaustion requirement in cases where raising an issue would be futile, where there was a lack of notice of a certain issue, where the issue is a pure legal question, or where a judicial interpretation intervened since a remand proceeding. (5) Even though the exceptions are recognized, the CIT has applied them in only a limited manner. (6)

    In Sucocitrico Cutrale Ltda. v. United States, the Court heard seven separate challenges that stemmed from an administrative review by Commerce. (7) Despite considering (and on one issue actually remanding) six out of the seven challenges, the CIT declined to consider the issue of Commerce's calculation of inventory costs. (8) Because the plaintiffs had failed to raise the challenge during administrative review, and because none of the exceptions applied, the CIT would not consider the issue. (9)

    The Court was also unwilling to allow the use of the ministerial error procedure to avoid claim preclusion on a substantive issue. (10) The Court recognized a relevant distinction between substantive claims and ministerial errors, which by definition are "unintentional error[s]" (11) that "by their nature [are] not errors in judgment but merely inadvertencies." (12) The Court rejected the notion that parties could preserve a substantive legal challenge by using the protection of the ministerial error process. (13) Otherwise, the Court feared, Commerce would be deprived of its opportunity to defend its decision at the proper time. (14)

    Because the relevant federal statute requires exhaustion "where appropriate," the CIT appears to be taking a hard line on the issue. (15) In 2012, the CIT generally found that recognized exceptions to the exhaustion requirement had limited applicability to the recorded facts. (16) The futility exception, for example, excuses parties for not raising an argument with Commerce if it would have simply required parties "to go through obviously useless motions in order to preserve [its] rights." (17) However, despite recognizing futility as an exception to the exhaustion requirement, the CIT took the position that this exception was only rarely applicable, and never applied it in 2012. (18) Even if Commerce is unlikely to accept an issue, parties should raise it in their case brief or risk precluding consideration by the CIT. (19)

    In PT Pindo Deli Pulp & Paper Mills v. United States, the CIT rejected respondent PT Pindo Deli's claim of the "lack of notice" exception to the exclusion requirement. (20) Pindo Deli contended that because multiply products were regularly classified under 4810.92 of the U.S. Harmonized Tariff System (HTSUS), and because the domestic industry did not list 4810.92 in the petition, Pindo Deli did not have notice that some of its multi-ply products would be subject to the Order's scope. (21) The Court rejected this argument and held that Pindo Deli had not established "a clear practice of classifying all multi-ply products under 4810.92 so that the exclusion of 4810.92 could imply that multi-ply products would not be included in the scope of the Petition." (22) The Court concluded that the plaintiff had adequate notice of Commerce's decision to include multi-ply coated paper in the scope of the investigation; therefore, Pinto Deli's failure to timely express its objection on the issue would not be excused. (23)

    The CIT did find the intervening judicial interpretation exception applicable in 2012. (24) The applicability of this exception was largely tied to the ongoing review of Commerce's zeroing methodology (discussed in greater detail below), an issue that also provided grounds for motions to stay proceedings. (25) The intervening judicial interpretation exception applies "when a pertinent judicial decision is rendered after the relevant administrative determination." (26) In both Dongbu Steel Co. v. United States and JTEKT Corp. v. United States, the Court rejected Commerce's reasoning on its interpretation of zeroing and remanded the decisions for explanation. (27) Such remands disrupted previously settled law, thereby excusing parties who failed to raise the issue during administrative reviews. (28) The CIT took an alternative approach in NSK Corp. v. United States, when it avoided the issue of exhaustion altogether. (29) The Court reasoned that the pending outcome of Union Steel v. United States may have made reaching the exhaustion issue unnecessary. (30) Thus, it refused to consider the issue of exhaustion and instead stayed the proceedings until the resolution of Union Steel. (31)

  3. ZEROING OF NEGATIVE DUMPING MARGINS

    For years, the topic of zeroing has demanded the CIT's attention as litigants repeatedly pursued the issue before the Court. (32) The cases in 2012 were no exception. (33) Zeroing refers to a method of calculating antidumping margins by aggregating only those dumping margins with positive values, and assigning all non-dumped transactions a dumping margin of zero. (34) Thus, any comparisons yielding negative dumping margins cannot work to offset positive dumping margins. Exporters and foreign governments see zeroing as a calculation methodology that ultimately overstates an entity's dumping margin, violates U.S. antidumping laws, and is inconsistent with the United States' international obligations. (35)

    Commerce calculates dumping margins on two separate occasions: during investigations, which establish the duty rate at the time of the initial dumping order, and subsequently during administrative reviews of those orders. (36) For many years, Commerce used zeroing to calculate antidumping margins during both investigations and administrative reviews. (37) Following a string of rulings by the World Trade Organization (WTO) against the United States, Commerce chose to end its practice of zeroing in investigations in 2006, but it continued to use zeroing to calculate dumping margins in administrative reviews. (38) Such divergent practices gave rise to challenges by several foreign respondents who argued that the statute could not be interpreted one way for investigations and a different way for reviews. (39)

    The issue of zeroing is not new to the CIT. Despite repeated WTO decisions finding the zeroing practice inconsistent with the WTO's Antidumping Agreement, the CIT generally ignored international law and deferred to Commerce's interpretation of the statute, accepting the zeroing practice as reasonable under U.S. law. (40) However, in Dongbu Steel Co. and JTEKT, the Court of Appeals for the Federal Circuit in 2011 questioned whether Commerce could justifiably interpret the statute one way for investigations (no zeroing) and differently for administrative reviews (with zeroing). (41) According to the Court, Commerce's seemingly arbitrary decision to employ divergent practices required either a satisfactory explanation or a change to a more consistent interpretation. (42) Following these decisions in 2011, the CIT effectively put a hold on its practice of sustaining zeroing in administrative reviews. (43)

    In 2012, the CIT often resisted Commerce's use of zeroing in administrative reviews until the law was settled. (44) In several cases, the CIT compelled Commerce to explain its divergent practice of zeroing. (45) In Fischer S.A. Comercio v. United States, the Court remanded for reconsideration and explanation of Commerce's decision to apply its inconsistent zeroing methodology when calculating Fischer's dumping margin. (46) Similarly, in Sucocitrico Cutrale, the Court found that Commerce must either choose a single consistent interpretation of 19 U.S.C. [section] 1677(35) or explain why its inconsistent interpretation was reasonable. (47)

    The most significant CIT zeroing case of 2012 was Union Steel v. United States, in which the Court accepted as reasonable the...

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