Tire Exporter Says Commerce Misapplies Presumption of Foreign State Control in AD Review

The Commerce Department misapplied the presumption of foreign state control by framing it as a burden on antidumping and countervailing duty respondents to "completely disprove potential government control," exporter Guizhou Tyre Co. argued in an April 18 reply brief at the U.S. Court of Appeals for the Federal Circuit (Guizhou Tyre Co. v. United States, Fed. Cir. # 23-2165).

Guizhou Tyre said that the appellate court in 1992 explained how presumptions work under the Federal Rules of Evidence, stating in Aukerman Co. v. R.L. Chaides Constr. Co. that the federal rules embody the "bursting bubble theory of presumptions." Under this theory, a presumption "completely vanishes upon the introduction of evidence sufficient to support a finding of the nonexistence of the presumed fact." The evidence presented must be enough to put a presumed fact's existence into doubt, meaning the "presumption compels the production of this minimum quantum of evidence from the party against whom it operates, nothing more," the brief said.

In the 2014-15 AD review of new pneumatic off-the-road tires from China, Commerce said Guizhou Tyre failed to rebut the presumption of state-owned control due, in part, to the company being minority owned by state-run entities. In response to the exporter's arguments, the U.S. said that there's no authority to show that the "minimum quantum of evidence" standard in Aukerman applies when the applicant rebuts the presumption of government control in a non-market economy nation (see 2403040064).

Guizhou Tyre said the authority is found in the legal definition of "presumption," which, according to Wex Legal Dictionary, says that a party can overcome a presumption by "providing the appropriate burden of proof." The definition also says that most presumptions "are rebuttable, meaning that they are rejected if proven to be false or at least thrown into sufficient doubt with evidence." The exporter also pointed to other Federal Circuit decisions, which said that the presumption is rebutted by putting the existence of government control "into genuine dispute."

Guizhou Tyre additionally cited a recent Court of International Trade decision in a separate case calling into question the agency's entire NME policy given that Commerce failed to point to a statutory basis for the policy (see 2302090073). That case is currently on appeal at the Federal Circuit. The trade court "establishes, at minimum," that the agency doesn't have powers "that free it from the constraints placed upon other agencies" related to rebuttable presumptions.

The exporter noted that this standard also may be subject to further scrutiny should Chevron deference be "revisited," but that for now, "as with all legal rebuttal presumptions, the presumption of state control bursts like a bubble upon the introduction of sufficient contrary evidence."

The remainder of the brief argued that the company actually provided enough evidence to rebut the presumption of foreign state control and that Commerce used the analysis for respondents majority owned by state-owned entities and not the analysis for minority state-owned entities. Guizhou Tyre said the U.S. relied heavily on Federal Circuit precedent affirming Commerce's rejection of a separate rate for majority SOE firms, "without the need to establish a direct nexus to actual control over export activities."

In contrast, "the CIT recognizes that minority SOE-owned respondents such as Guizhou can rebut the presumption, as their separate rate denial must be supported by 'more indicia of control' beyond ‘potential control,'" the brief said. The exporter said it's asking this court to "accept the CIT-recognized critical distinction between majority and minority SOE-owned respondents."

Commerce's analysis, meanwhile, considers each factor "in isolation," thus creating an "irrebuttable presumption of state control." This analysis should be relegated to the "majority SOE-ownerhsip context."