CIT Sides With Commerce, Upholds AD/CVD Circumvention Ruling

The Court of International Trade sustained the Commerce Department's finding that Al Ghurair Iron & Steel (AGIS) circumvented the antidumping and countervailing duty orders on corrosion-resistant steel products (CORE) from China via the United Arab Emirates, in a Sept. 24 ruling made public on Oct. 4.

AGIS had challenged Commerce's finding that AGIS's level of investment and production facilities are minor, and that the value of processing in the UAE represents only a small portion of the value of the merchandise shipped to the U.S. The plaintiff also argued Commerce should not have valued Chinese cold-rolled steel and hot-rolled steel substrates using Malaysian surrogate values and that Commerce ignored patterns of trade that confirm AGIS was not circumventing the AD/CVD Orders.

Judge Timothy Reif ruled that AGIS's level of investment and production facilities in the UAE were minor compared with those in China. AGIS had argued Commerce did not have the grounds to conduct a comparative analysis between the level of investment and production facilities between the two countries, but Reif ruled that since the statute doesn't outline a specific methodology to determine the significance of the investment or production facilities in the country suspected of circumvention, and that Commerce's decision to use a comparative analysis was properly supported.

Reif also backed the government on its determination of insignificant investment and production facilities. The judge noted that investment in the UAE was significantly smaller than in China with regard to the CORE products.

Commerce had based its circumvention finding on the fact that the value of the processing performed in the UAE was merely a small proportion of the CORE goods imported to the U.S. Among other elements of this finding, AGIS said that the agency's calculation of value-added percentages was wrong and that Commerce didn't use a benchmark when determining the value of processing, making the result inconclusive.

Again, Reif held that since the statute does not say that a benchmark is required, Commerce was right to not use them. As long as Commerce uses a "reasonable formula that satisfies the statutory requirements," then its conclusion on the value of the processing performed in the UAE will be upheld, Reif said.

"Further, Congress did not intend to create a 'rigid numerical standard' for Commerce’s determination of whether the value of the processing performed in the foreign country was significant," Reif said. "Instead, Congress intended for Commerce to have 'flexibility in administering this standard' to be implemented on a 'case-by-case basis' and for 'the new standard [to be] less difficult to meet, thereby improving [Commerce’s] ability to prevent circumvention.' Therefore, contrary to plaintiff’s argument, the statute does not require Commerce to provide a specific benchmark value to delineate a finding as to whether the value of processing performed in a foreign country is significant, nor does the statute require Commerce to conduct a comparative analysis."

During the circumvention inquiry, Commerce decided to use surrogate values for HRS and CRS values -- a move typically reserved for AD/CVD proceedings in non-market economies. The agency supported this decision by saying that while normally it would just use the actual prices paid for China-made parts in a proceeding involving a market economy, such as the UAE, circumvention inquiries are special. Reif upheld this determination since the case is over whether the goods circumvented the AD/CVD orders on China and were thus originally from China.

(Al Ghurair Iron & Steel LLC v. United States, Slip Op. 21-129, CIT #20-00142, dated 09/24/21, Judge Timothy Reif. Attorneys: Robert Gosselink of Trade Pacific PLLC for plaintiff AGIS; Mollie Finnan for defendant U.S. government)