Commerce Sticks With China-Wide Rate for Exporter After CIT Opinion Questioning NME Policy

In remand results filed at the Court of International Trade, the Commerce Department continued to find that antidumping respondent Jilin Forest Industry Jinqiao Flooring Group Co. has failed to establish its eligibility for a separate rate, making it part of the China-wide entity, and that the application of Commerce's non-market economy definition to Jinqiao Flooring was reasonable. The remand results relied heavily on a June U.S. Court of Appeals for the Federal Circuit case, China Manufacturers Alliance v. U.S., which established that China-wide rates can still be based on adverse facts available even if no members of the country-wide entity were found to be uncooperative (Jilin Forest Industry Jinqiao Flooring Group Co., Ltd., v. United States, CIT #18-00191).

Following an antidumping duty order from 2011 on multilayered wood flooring from China, Jinqiao Flooring, along with several other Chinese exporters, found itself subject to annual administrative reviews of the order. In every review, Jinqiao Flooring received an individual antidumping rate. That ended with the 2015-16 review. After a change to policy, Commerce found Jilin under de facto government control, applying the AFA rate to the exporter and prompting Jinqiao Flooring to file a complaint with CIT. The respondent accused Commerce of unlawfully determining that it is not separate from Chinese state control and said the agency's failure to calculate an individual rate was contrary to law.

In the first opinion in the case, Judge Richard Eaton said Commerce failed to adequately explain why it applied the policy to Jinqiao Flooring (see 2104300079). Seeing as the policy was meant to incentivize greater compliance in AD administrative proceedings and Jilin fully complied with all Commerce requests, the NME policy should not have been used in this case, Eaton said. The judge told Commerce that if it wanted to stick with its NME policy, it will have to explain much more about how it came to its decision, including an explanation of the purpose of the policy itself.

Then, the Federal Circuit, in an unrelated case, said that country-wide rates assigned in NME cases are individual rates, rather than "all-others" rates as provided for in the statute (see 2106100044). Further fleshing out the proper use of the NME policy in its remand results, Commerce said that the state's role in the economy results in "fundamental distortions" in the economy.

"Thus, were Commerce to apply numerous individual rates to companies within a state-controlled economy, where the state is presumed to control export activities of such companies and where there has been no demonstration of independence from the government, this would allow for the potential manipulation of price or production related to such exports," the remand results said. "... Further, as a matter of basic logic, and as recognized by the CAFC across numerous factual scenarios, it is reasonable to apply the same antidumping duty rate to all members of the same NME-wide entity."

Eaton, in his decision, took issue with the fact that Commerce had not codified the NME policy in its regulations. In response to this, the agency fell back on its Chevron deference defense, asserting that "even if a practice is not adopted by notice and comment rulemaking," it can be owed legitimacy by deference to the agency. "Further, not only has the NME presumption and use of a single antidumping duty rate for the NME-wide entity been affirmed by the CAFC, but Commerce has described these policies in detail in the context of its administrative proceedings," Commerce said.