CAFC Overturns 'All Others' CV Rate on China Aluminum Extrusions
In a move that could lower the “all others” countervailing duty rate on aluminum extrusions from China, the U.S. Court of Appeals for the Federal Circuit ruled on June 3 that the Commerce Department has to include the rates of voluntary respondents in the “all others” rate it calculates in countervailing duty proceedings.
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In the original investigation on aluminum extrusions from China, the three “mandatory respondents” that Commerce picked for review did not cooperate and were assigned a 374.15% penalty rate. Faced with much less work than it had initially anticipated, Commerce picked two more respondents that had “volunteered” for review, and assigned them CV duty rates of 8-10%.
Under Commerce’s regulations, the “general rule” is for the rate for all other companies not individually investigated (the “all others rate”) to be based on the mandatory respondents’ rates, unless those mandatory respondents get zero or penalty rates. With all three mandatory respondents getting penalty rates, Commerce then moved on to the “special rule,” or what it considered to be the next reasonable method. Rather than use the voluntary respondents’ rates, it decided to assign the “all others” companies the 374.15% penalty rate as well.
Commerce’s regulation is based on a section of the Tariff Act that says the all others rate should be based on the rates for “exporters and producers individually investigated,” excluding any zero or penalty rates. Commerce interprets the phrase “exporters and producers individually investigated” to mean only mandatory respondents. Otherwise, the all others rate would be skewed downward, because the only incentive to volunteer to be investigated is if a company thinks it’s going to get a low rate, Commerce says.
The Court of International Trade had found that explanation reasonable (see 12113029). Although it ordered Commerce to recalculate the all others rate -- the agency lowered it to 137.65% in response -- the trade court found the regulation to be a reasonable interpretation of the underlying law.
The Appeals Court disagreed. “Exporters and producers individually investigated” means all individually investigated exporters and producers, not just mandatory respondents. As such, Commerce veered from the law when it set its regulation on calculating the all others rate. CAFC reversed the CIT decision, and ordered Commerce to recalculate the all others rate with the understanding that the low CV duty rates of the voluntary respondents are to be included. Although the change would only affect final assessments for companies that are a party to the appeal, Commerce has not changed the all others rate since the investigation, so it could lower the CV duty cash deposit rate in effect for all “all others” companies.
Circuit Judge Jimmie Reyna dissented from the ruling. He said that the fact that the law does not define what “individually investigated” means leaves it ambiguous as to whether it includes voluntary respondents. Commerce acted within its discretion when it interpreted that phrase not to include voluntary respondents, he said.
(MacLean-Fogg Company v. U.S., Fed. Cir. 13-1187, dated 06/03/14, Judges Newman and Clevenger, Reyna dissenting)