Trade Court Upholds Commerce's Decision to Use China-Wide Rate for Italian Exporter

Minority ownership by government-controlled entities does not change the presumption of government control, Court of International Trade Judge Jennifer Choe-Groves ruled in a March 20 opinion. The opinion upheld the Commerce Department's use of the China-wide rate for Pirelli Tyre on remand, with Choe-Groves holding that Pirelli failed to rebut the presumption in an antidumping duty administrative review of certain passenger vehicle and light truck tires from China.

Pirelli had argued that Commerce’s past practice showed that a lower burden of proof should be required when government-controlled entities hold only a minority interest in a respondent exporter. The judge disagreed, ruling that while minority ownership is evidence of potential control that Commerce can weigh, it does not alter the burden on the exporter to prove its independence.

Commerce legally employs a rebuttable presumption that all companies within a nonmarket country are subject to government control and should be assigned a single, country-wide rate by default unless an exporter demonstrates affirmatively that it maintains independence from the government. "The default position is one of government control," Choe-Groves said.

Pirelli argued that Commerce improperly relied on the potential for its minority ownership to control its operations rather than actual control over its operations. Citing prior trade court decisions, Choe-Groves said that when a company is minority government-owned, potential control doesn't equate to actual control, but that Commerce can consider other indicators of control to find a minority controlled company fails to rebut the government control presumption.

Here, the finding that Pirelli failed to rebut the presumption was "further supported by Commerce’s subsequent consideration and discussion of Pirelli’s ownership, the composition and independence of Pirelli’s Board of Directors, common board members between Pirelli entities and government-controlled entities, statements in Pirelli’s 2017 Annual Report, the authority of Pirelli’s CEO, Marco Tronchetti Provera, and the transfer and/or disposal of proprietary know-how," Choe-Groves said. "The Court concludes that it was reasonable for Commerce to consider the potential for control together with additional indicia, and its analysis was in accordance with the law."

(Pirelli Tyre v. U.S., CIT #20-00115, Slip Op. 23-38 dated 03/20/23, Judge Jennifer Choe-Groves. Attorneys: Daniel L. Porter of Curtis, Mallet-Prevost for plaintiff Pirelli Tyre; Ned Marshak of Grunfeld Desiderio for plaintiff-intervenor Shandong New Continent Tire; Sosun Bae for defendant U.S. government; Nicholas Birch of Schragrin Associates for defendant-intervenors United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO)