CAFC Upholds Separate AD Rate Rejections for 3 Chinese Tire Exporters

The U.S. Court of Appeals for the Federal Circuit on April 28 issued a pair of decisions rejecting challenges from three exporters to the Commerce Department's decision to deny them separate antidumping duty rates in the 2012-13 and 2014-15 reviews of the antidumping duty order on new pneumatic off-the-road tires. Judges Richard Taranto, Raymond Clevenger and Todd Hughes said the exporters' claims on whether the agency can "deem decisive an exporter's failure to establish lack of state control of management selection" without more proof of state control over export activities were precluded by the appellate court's recent holding in Pirelli Tyre v. U.S.

Taranto, writing for the court, said Commerce provided adequate evidence to support its decision to reject the separate rate applications of all three companies.

Exporters Guizhou Tyre Co. and Aeolus Tyre Co. challenged the agency's rejection of their separate rate bids in the 2014-15 review, in which Commerce said the companies failed to rebut the presumption of de facto Chinese state control. The agency centered this finding on the third "factor" in its standard de facto control analysis, which looks to state control of management selection. Guizhou and Aeolus argued that Commerce can't find this factor alone to be decisive in its de facto control analysis, especially for firms that are only minority-owned by state-owned companies.

Taranto said this claim is precluded by the court's ruling in Pirelli Tyre v. U.S., which the court issued in February (see 2502110030). In that decision, the court said this third factor doesn't require a link to a respondent's export activities. Taranto said Guizhou and Aeolus' claims regarding the agency's third factor for assessing de facto control "cannot prevail in light of" Pirelli, and the companies "made no meaningful effort to show otherwise."

Thus, the only issues that remained were whether Commerce's finding of de facto government control for both companies was backed by sufficient evidence and whether the agency erred in finding Guizhou to have rebutted the presumption of foreign state control in the fifth AD review only to reverse course in the seventh review -- the review under consideration here.

The court said Commerce's findings for both companies were backed by substantial evidence. For Guizhou, Taranto cited five pieces of evidence backing the agency's conclusion, including the fact that the state-owned Guiyang Industry Investment Group Co. (GIIG) owns 25.2% of the company's shares and is its largest shareholder, GIIG's effective selection of the Guizhou board at a 2012 shareholder's meeting and GIIG's ability to immediately get shareholder approval for one of its proposals during a 2015 shareholder meeting despite an initial rejection by the shareholders.

Guizhou argued that the 2012 and 2015 shareholders' meetings don't show government control, since GIIG wasn't involved in nominating any director candidates in 2012 and, "if they had arranged to act jointly," the other shareholders could have convened an interim shareholders' meeting. Taranto held that "Commerce could reasonably reject Guizhou Tyre’s view of the evidence and the inference to be drawn from it." The judge said Guizhou doesn't dispute that GIIG "in fact dominated the votes in the 2012 meeting and selected" the company's directors, adding that the fact that the other shareholders "could have banded together" is "unaccompanied by record evidence that such coordination of shareholders occurred."

The court said the evidence similarly supports Commerce's finding for Aeolus. Taranto cited evidence that Aeolus is 42.58% controlled by China National Tire and Rubber Co., which is a wholly owned subsidiary of state-owned China National Chemical Corporation, and 6.48% owned by other state-owned entities. The court also cited a 2014 shareholder's meeting in which the board of directors was elected, where China National Tire "represented the vast majority of votes."

Aeolus said the 2014 board election doesn't show state control, sinc the shareholders didn't nominate the board candidates and the non-state owned shareholders could have collectively out-voted the state-owned companies. Taranto said the agency can reject these claims for the same reasons Guizhou's arguments failed.

Guizhou also said Commerce erroneously ruled the exporter showed independence from state control in the fifth review but not in the seventh, especially since state ownership of Guizhou actually declined between the reviews and a state agency stopped conducting performance reviews of the company. Taranto said the agency properly explained that it now uses a new separate rate analysis that looks at whether the government "might be able to exercise, or have the potential to exercise, control of a company’s general operations through minority government ownership under certain factual scenarios."

Exporter Double Coin Holdings also challenged the rejection of its separate rate application in the 2012-13 AD review on the same order. The court again sustained Commerce's decision, noting evidence used by the agency, including the fact that the state-owned Huayi Group is the majority owner of Double Coin and that Huayi "controlled the composition of Double Coin’s board." While Double Coin said Commerce ignored evidence, the court said the duty to consider all the evidence doesn't require "explicit mention and discussion of each piece of evidence."

(Guizhou Tyre Co. v. United States, Fed. Cir. # 23-2163, -2164, dated 04/28/25, Judges: Richard Taranto, Raymond Clevenger and Todd Hughes; Attorneys: Jordan Kahn of Grunfeld Desiderio for plaintiffs-appellants led by Guizhou; Stephen Tosini for defendant-appellee U.S. government)

(China Manufacturers Alliance v. United States, Fed. Cir. # 23-2391, dated 04/28/25, Judges: Richard Taranto, Raymond Clevenger and Todd Hughes; Attorneys: James Durling of Pillsbury Winthrop for plaintiffs-appellants China Manufacturers Alliance and Double Coin Holdings; Stephen Tosini for defendant-appellee U.S. government)