CAFC Finds AFA China-Wide Rate Can Apply to Cooperative Respondent in AD Review

Antidumping duty China-wide rates can still be based on adverse facts available (AFA) even if no members of the countrywide entity were found to be uncooperative in an administrative review, the U.S. Court of Appeals for the Federal Circuit said in a June 10 decision reversing a decision to the contrary from the Court of International Trade.

Double Coin Holdings had challenged the partial AFA rate assigned to it in an AD duty review on off-road tires from China, arguing that, as it was the only member of the China-wide entity under review and cooperated with the proceeding, it shouldn’t have been assigned a penalty rate. The company had been assigned a zero rate in the preliminary results of the review, before Commerce found in the final results that it was owned and controlled by a Chinese-government run holding company, and therefore did not demonstrate independence from state control.

CIT agreed in a 2017 decision, finding the situation different from that of another CAFC case where the appeals court found an AFA countrywide rate could be applied to a cooperative diamond sawblade exporter. While the diamond sawblade exporter was one of many companies in the relevant review that didn’t prove independence from state control, some uncooperative, Double Coin was the only one in the off-road tires review, CIT had said.

The Federal Circuit disagreed that there was any distinction between the cases. The fact that Double Coin was the only member of the China-wide entity under review is irrelevant, it said.

Legally, countrywide rates assigned in non-market economy (NME) AD duty cases are individual rates, rather than an “all-others” rate as provided for in the statute. “Commerce may permissibly assign such a rate to the unitary group of exporters in an NME country that have failed to rebut the presumption of government control,” the Federal Circuit said. “This rate may be based in whole or in part on FA or AFA, and Commerce may carry forward an initial NME entity rate, including adverse inferences built into that rate, in subsequent administrative reviews,” the appeals court said.

Because that rate can be carried forward, the fact that the China-wide rate is based on AFA is not contingent on whether the respondents in a particular review are cooperative. For off-road tires, the China-wide rate was based on AFA because only 30 of 94 exporters responded to Commerce’s quantity and value questionnaires in the original investigation. Double Coin cooperated, and only joined the China-wide entity by virtue of it being owned by a state-run corporation, but by joining the China-wide entity it became subject to the individual AFA rate that included those 64 non-cooperative exporters from the investigation, CAFC said.

“Commerce may permissibly assign [a countrywide] rate to the unitary group of exporters in an NME country that have failed to rebut the presumption of government control,” CAFC said. “This rate may be based in whole or in part on FA or AFA, and Commerce may carry forward an initial NME entity rate, including adverse inferences built into that rate, in subsequent administrative reviews.”

“As we concluded in Diamond Sawblades, where a respondent in an NME country cooperates with an investigation or review but fails to rebut the presumption of government control, Commerce may permissibly apply the country-wide NME entity rate,” the appeals court said. “This conclusion applies whether or not other members of the NME-wide entity are identified by name and subject to the administrative review at issue.”

(China Manufacturers Alliance v. U.S., CAFC # 2020-1159, dated 06/10/21, Judges Lourie, Clevenger and Hughes. Attorneys: James Durling of Curtis Mallet-Provost for plaintiffs-appellees China Manufacturers Alliance, LLC, and Double Coin Holdings Ltd.; John Jacob Todor for defendant-appellant U.S. government)