White House Improperly Meddling in AD/CVD Case, South Korean Exporters Say

Lawyers for South Korean exporters slammed a purported attempt by the White House to influence an ongoing Commerce Department antidumping duty administrative review, in several briefs filed with the agency March 16. The emailed memorandum sent March 2 by National Trade Council Director Peter Navarro to Commerce Secretary Wilbur Ross improperly applied political pressure to what is supposed to be an impartial process, said the lawyers, who represent exporters of oil country tubular goods from South Korea.

While political influence has long been suspected in antidumping and countervailing duty cases, Navarro’s memo is notable because of its visibility, said a lawyer unassociated with the case who generally represents foreign exporters. "Pressing the levers” in AD/CVD cases is assumed to happen “behind the scenes with some regularity,” but this level of transparency is new, as is the decision of career officials at Commerce to take a communication from the White House and treat it as any other communication from an outside party by putting it on the case's public record. Under agency rules, communications related to the case with outside parties must be noted in the record of the case with a memo.

Also novel is the level of detail in the arguments set forth in the letter, the lawyer said. While the level of transparency is “refreshing,” the memo represents the White House “meddling in a way you usually don’t see” in AD/CVD cases, he said. “As you might have expected this particular administration to do,” they’re meddling more “substantively” and “specifically” than past administrations, the lawyer said.

Another lawyer that usually represents domestic manufacturers in AD/CVD cases was speaking during a recent conference for trade lawyers when word of the memo spread, he said. “After I got done with the panel I was on, it was the only topic of conversation amongst agency counsel and former agency counsel,” he said. “We distributed the memo internally because no one had ever heard of anything like that happening before. We also found the decision to place the memo on the public record remarkable.”

The memo from Navarro, also emailed to Trump administration landing team member Earl Comstock, highlights potential use of the new “particular market situation” methodology enacted by Congress in 2015 (see 1508050024). That would allow Commerce to deviate from exporters’ actual prices in costs when calculating their rates, somewhat akin to the agency’s methods for calculating AD rates for non-market economies like China and Vietnam. The memo says that, if low duty rates are eventually calculated on oil country tubular goods from South Korea, it could hurt a steel tube manufacturer’s plans to complete a factory in the U.S. and lessen its reliance on imports in favor of U.S. production. The memo recommends the commerce secretary ask for “an immediate briefing” on the case and “consider allowing attendance of the National Trade Council for this.”

In response, lawyers for South Korean exporters Nexteel, Hyundai Steel Company and Husteel objected “to the apparent attempt” by the steel tube manufacturer, which is the parent company of a participant in the case, “to apply political pressure through the Director of the National Trade Council” to influence Commerce’s final results. The attempt to interfere in an ongoing investigation is “plainly improper,” said a brief from lawyers for SeAH, another South Korean exporter. “The statute describes a process” for Commerce “to build a factual record and make a decision based solely on the evidence contained in that record. It does not permit a role for instructions or unsupported factual representations by non-Departmental officials.”

Navarro’s memo and "suggestion to confer further on this matter outside the confines of this case are totally unacceptable,” lawyers for ILJIN Steel Corporation said in its response. When Commerce "issues its final results, it must do so based on the record of this proceeding and the law,” ILJIN's brief said. Any attempt by the National Trade Council to “relitigate” Commerce’s preliminary findings in the case “for political ends must be rejected,” it said. It is irrelevant that Tenaris, the steel tube manufacturer mentioned in Navarro’s letter, “wants high margins to justify its investments or its possible future plans regarding subsidiaries outside the United States,” it said.

Lawyers for the domestic manufacturers seeking AD duties urged Commerce to consider the “important” issues in Navarro’s memo. “The President was elected on a commitment to strong trade law enforcement, and this includes all of the elements available to the Department, including the new particular market situation provision, the application of adverse facts available, self-initiation, and the taking of actions against transshipment, circumvention, and export control violations,” the domestic manufacturers' brief said.

Though the memo is a “pre-decisional, inter-agency communication from within the executive branch of the government that is expressly covered by” privilege and does not need to be made public, Commerce has “in any event” put the email on the record, the brief from the domestic manufacturers said. Commerce often receives congressional letters in investigations and reviews requesting that the agency carefully examine the facts and the law when making its final determination, they noted. “We are confident that the Department will continue to do so here. Mr. Navarro's email on behalf of the National Trade Council is likewise a request that the Department carefully consider the application of the new law in this case,” the domestic manufacturers said.

The memo from Navarro and Commerce's procedures in the case complied with the law, a Commerce official said. “As one government entity discussing the matter with another, it is entirely legal as long as we file an ex-parte notification, which we did,” he said.

Email ITTNews@warren-news.com for copies of the Navarro memo or the other briefs.