CIT Says Exporter's AD Rate Trumps Producer's in China Duty Liquidation Challenge
Importers of goods from China and Vietnam who are subject to antidumping duties must pay at the exporter’s rate, and not the producer’s, ruled the Court of International Trade Aug. 21. That’s the case even if the exporter isn’t a respondent and gets assigned the China- or Vietnam-wide rate, because the country-wide rate serves as a specific AD rate to every non-separate rate exporter, CIT said. Because the regulations prefer specific exporter rates to producer rates, subject merchandise produced by a company with a low separate rate, but exported by a company that doesn’t prove separate rate status, will enter at the exporter’s high China- or Vietnam-wide rate, the court said.
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Michaels Stores challenged cash deposit and liquidation instructions from two AD duty administrative reviews on cased pencils from China. The company had imported pencils produced by three companies that had received relatively low AD rates in earlier reviews after proving their independence from state control. But the pencils had been exported from China by companies that had never asked for independent "separate rate” status. As a result, Commerce considered those companies to be part of the “China-wide” state-controlled entity, and subject to a high AD rate of 114 percent. Michaels thought it owed cash deposits at its producers’ rates, and acted accordingly. But when the companies’ entries were liquidated at the end of the administrative reviews, Commerce assessed AD duties at the 114.9 percent China-wide rate.
The relevant regulation, 19 CFR 351.107(b)(2), says Commerce’s first preference is to assess AD duties at the exporter/producer combination rate, or the exporter’s specific “noncombination” rate. If no rate is available for the exporter, then Commerce is to assess AD duties at the producer’s rate or the “all others” rate. Michaels argued that because its exporters weren’t listed by Commerce, they didn’t get a specific rate, so the agency should have turned to the producer’s rates.
The court rejected the company's arguments. Unlike an all others rate, the China-wide rate is a specific rate for each company assigned to the country-wide entity, CIT said. The alternative would mean Commerce would have to list every state-controlled exporter and indicate that each would have duties assessed at the China-wide rate. “Not only is this burden on Commerce possibly impracticable, but this also could allow [Chinese] firms to establish new, unlisted exporters that have not applied for a separate rate to export their goods,” avoiding the China-wide rate and possibly avoiding review. On the other hand, Commerce’s stance that the China-wide entity serves as a specific exporter rate “upholds two key policy rationales in the NME context: that an exporter’s rate is preferable to a producer’s rate as the exporter is likely the party to set prices and know which goods are destined for the United States; and that each exporter has the burden of proving it is eligible for the separate rate,” CIT said.
(Michaels Stores, Inc. v. U.S.; Slip Op. 13-110, dated 08/21/13, Judge Restani)
(Attorneys: Lewis Leibowitz of Hogan Lovells for plaintiff Michaels Stores, Inc.; Carrie Dunsmore for defendant U.S. government)