CIT Questions Use of Commerce's Non-Market Economy Policy in AD Case Remand

The Court of International Trade remanded an antidumping case to the Commerce Department, finding that the agency's determination that wood flooring importer Jilin Forest Industry Jinqiao Flooring Group Co. was de facto controlled by the Chinese government lacked substantial evidence. Judge Richard Eaton, in the April 29 opinion, also found that Commerce's application of its non-market economy policy to Jilin did not clear the proper evidentiary standard, launching into an elongated discussion of the policy's original intent.

Following an antidumping duty order from 2011 on multilayered wood flooring from China, Jilin, along with several other Chinese exporters, found itself subject to annual administrative reviews of the order. Under every review, Jilin received an individual antidumping rate. That ended with the 2015-16 review. Due to a change in governmental policy, Commerce accused Jilin of being under de facto government control, applying the adverse facts available rate to the exporter and prompting Jilin to file a complaint in CIT. Jilin accused Commerce of unlawfully determining that it is not separate from Chinese state control and that the agency's failure to calculate an individual rate was contrary to law.

Eaton ruled Commerce failed to adequately explain why it applied the policy to Jilin. Seeing as the policy was meant to incentivize greater compliance in AD administrative proceedings and Jilin fully complied with all Commerce requests, the NME policy should not have been used in this case, Eaton said. On remand, if the agency continues to find that the NME policy should be applied, it will have to explain much more about how it came to its decision, including an explanation of the purpose of the policy itself.

“In particular, Commerce has never explained why the NME Policy should apply to rates being determined pursuant to the Mandatory Respondent Exception or identified the statute or statutes that it has construed to reach that result," Eaton said. Going further, Eaton discussed how the NME Policy has never been formalized following its introduction in 1991. Given this lack of formalization, Commerce is afforded no deference in how it applies the policy -- leading to the adjudication of the policy on a case-by-case basis in front of the U.S. Court of Appeals for the Federal Circuit. For his part, Eaton held that the intent of the policy matters and that if Jilin is to be subjected to this policy, it should be done with thorough rationalization from Commerce.