CIT Nixes Higher Adverse AD Rate in Mexico Circular Welded Pipe, Etc.

Mexican exporter Mueller (Mueller Comercial de Mexico, S. de R.L. de C.V.) and its U.S. importer Southland (Southland Pipe Nipples Co., Inc.), challenged the International Trade Administration’s assignment of an adverse facts-available AD duty rate higher than the all-others rate, in the AD administrative review of certain circular welded non-alloy steel pipe from Mexico for the November 2007- October 2008 period. The Court of International Trade agreed that the higher rate was unsupported.

Mueller only exported pipe manufactured by other producers with their own established AD cash-deposit rates (Tuberia Nacional, S.A., de C.V. (TUNA) with a rate of 2.92%, and Hylsa, S.A. de C.V., with a rate of 10.38%), and used these producers’ rates at time of entry in accordance with the ITA’s reseller policy.¹

The two producers ultimately did not participate in the review and Mueller, after submitting an initial Section A volume & value response to the ITA, withdrew its participation², stating that would have been futile for it to participate on its own without access to the cost and price information of its suppliers.

The ITA determined that Mueller merited a total AFA AD duty rate for failing to cooperate to the best of its ability, and reasoned that Mueller was “already subject to the all-others rate of 32.62%” as Mueller had never been reviewed. To provide an incentive for cooperation, the ITA decided it should assign the company a still higher rate of 48.33%, which it found using a single TUNA transaction in a prior review.

The CIT disagreed with the ITA’s determination, holding that under the ITA’s reseller policy, the applicable AD duty rates in place for Mueller were the cash deposit rates of its suppliers. Therefore, the court found, the all-others rate of 32.62% provided adequate incentive for cooperation as an adverse facts-available rate.

The CIT further held that the 48.33% rate assignment based on a single transaction was a departure from established practice and was unsupported by law or evidence, and instructed the ITA to reconsider its determination to comply with the court’s opinion.

¹Pursuant to the reseller policy, under certain circumstances, an exporter (reseller) that does not produce the goods it exports deposits the AD cash deposit rate of its producer, as the producer is assumed to know that its product’s destination is the U.S.

²The CIT noted that prior court rulings have confirmed a “common sense” assumption that a respondent that fails to answer a questionnaire or otherwise does not cooperate “knows” it will usually be assigned the highest rate from any segment of the proceeding as a result.

(See ITT’s Online Archives 11121413 for summary of final results of the most recent AD duty administrative review of circular welded non-alloy steel pipe from Mexico involving Mueller for the 2009/2010 review period.)

(Slip Op. 11-159, dated 12/16/11)