Petitioners' Intentions Vital in Resolving AD/CVD Scope Questions, Says CAFC
The back-and-forth between domestic petitioners and the Commerce Department during antidumping and countervailing duty investigations is an important factor in deciding whether products are included within the scope of duties, said the U.S. Court of Appeals for the Federal Circuit on June 20 as it reversed a lower court ruling. The Court of International Trade had in 2013 found Fedmet’s magnesium alumina carbon bricks (MACBs) to be covered by AD and CV duties on magnesia carbon bricks from China, along the way affirming Commerce’s determination that the scope itself was ambiguous. But according to CAFC, communications between Commerce and Resco Products, the domestic company that had originally requested the duties, resolved all ambiguity in favor of excluding MACBs from the scope.
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CIT had said that the scope was ambiguous because it didn’t specifically exclude MACBs, nor did it contain parameters for what is considered an MACB (see 13053102). Looking to industry sources for clarification, CIT said that Commerce was correct in finding Fedmet’s MACBs, which contain 8-15% added alumina, are covered by AD and CV duties.
The Appeals Court said neither Commerce nor CIT should have looked elsewhere, because the answer was available in the record of the proceeding. When Fedmet requested the duties, it said in the petition that they shouldn’t cover MACBs. Commerce then asked for confirmation that MACBs shouldn’t be covered. Fedmet responded that the scope “focuses only on [magnesia carbon bricks],” and declined to revise the scope when given the chance.
Fedmet’s clarifications were a key factor in the investigation because the ITC made its injury determination based on the statements. If the ITC had also looked to see whether MACBs were harming U.S. industry, it may have come to a different result. Also, Fedmet was required to show that it was supported by domestic industry in order to even begin the investigation. If producers of MACBs were included in “domestic industry,” Fedmet may not have had the required support, said CAFC.
In investigations, “a petitioner must balance the incentive to achieve as broad a definition of the domestic like product as possible, with the requirement that it must prove standing and injury via production and economic trade data that is relative to the product subject to the investigation,” said Circuit Judge Jimmie Reyna in the majority opinion. “In view of this dynamic, we hold that, where a petitioner is requested to clarify with a high degree of specificity the scope of its petition, its response is highly germane to a subsequent scope determination. A petitioner has an obligation to be explicit and precise in its definition of the scope of the petition both prior and during the investigation,” he said.
Judge Wallach Dissents, Citing Potential for Manipulation
Judge Evan Wallach dissented, arguing that CAFC should have deferred to Commerce and the trade court and affirmed the scope ruling. Even as it said the scope wasn’t ambiguous, the majority failed to delineate at what point magnesia carbon bricks that contain alumina contain MACBs. The ITC’s injury report, for example, included magnesia carbon bricks that contained 4.6% alumina, which isn’t that much below the content of Fedmet’s MACBs. “By failing to acknowledge this definitional problem, the majority leaves the Orders open to manipulation,” said Wallach. “Rather than paying the antidumping and countervailing duties on [magnesia carbon bricks], importers can simply add small amounts of alumina to their products and label them [MACBs] instead of [magnesia carbon bricks].
(Fedmet Resources Corp. v. U.S., Fed. Cir. 13-1539, dated 06/20/14, Judges Reyna and Rader, Judge Wallach dissenting)