Pea Protein Exporters Were Controlled by Chinese Government, US Argues
The Commerce Department was right to find that exporter Yantai Zhongzhen Trading Co. was government-controlled, the United States said Feb. 3 (Yantai Oriental Protein Tech Co. v. United States, CIT # 24-00181).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Zhongzhen, which brought its case along with a number of other exporters, also was wrong as to its challenge to the critical circumstances finding Commerce reached using adverse facts available, the government said.
The exporter filed an October 2024 motion for judgment arguing that it should have been assigned a separate rate in the department’s investigation of pea protein from China. The fact that two of its officials were members of a local chapter of the Chinese Communist Party didn’t mean that it was controlled by the Chinese government, it claimed (see 2410280019).
But Zhongzhen had misapprehended the standard for determining government control of an exporter in a non-market economy, the U.S. said. The exporter was presumed to be controlled by the Chinese government, the U.S. said, and bore the burden -- which it failed to carry -- of showing that it wasn’t.
Both Zhongzhen’s president/executive director and its general manager and legal representative have “memberships in various parts of the Chinese government,” it said.
For example, it said, the president/executive has an “unpaid and honorary” position in the Zhaoyuan City People’s Congress and the Yantai City People’s Congress. In its final determination, Commerce referenced a “2022 China Daily article that explained these local people’s congresses are one of the ways in which ‘people exercise State power’” and further observed that the government of China has itself identified local congresses as having the authority to make decisions about the “construction of the local economy,” the U.S. said.
It acknowledged that Commerce has previously granted separate rates to Chinese companies with officials in local government, but it said that the records differed in those instances. In one, for example, the department possessed “specific information” showing that the relevant official wasn’t part of a government body “directly involved in the export-related decision making of the respondent.” In another, the exporter provided enough evidence to successfully show lack of government control, it said.
Zhongzhen also couldn’t demonstrate that it wasn’t de facto controlled by the Chinese government, it said, failing three out of the four prongs of the statutory test.
The U.S. also addressed Commerce’s denial of a separate rate to another respondent, Junbang. Junbang was solely owned by Shuangta Food, it said, which itself had the government of Jingling Town, Zhaoyuan City, as its largest shareholder via the entity Junxing Center. It also failed to rebut the presumption of de facto control, the U.S. said.
And it defended its decision to impose a China-wide 280.31% rate based on adverse facts available.