Chinese Exporter Failed to Rebut Presumption of Government Control in AD Case, CIT Says

The Court of International Trade upheld the Commerce Department's finding that Zhejiang Machinery Import & Export Corp. failed to rebut the presumption of de facto government control, thus barring it from receiving a separate antidumping rate, CIT said in a June 23 decision. The ruling leaves ZMC with the 92.84% China-wide rate in an antidumping administrative review on tapered roller bearings and parts thereof, finished or unfinished, from China.

In an antidumping review concerning a non-market economy, such as China, an exporter can request a separate rate if can prove it is not de facto controlled by the government. Commerce said ZMC failed to meet this standard. The exporter, through multiple layers of ownership, is ultimately operated by the Zhejiang Provincial State-owned Assets Supervision and Administration Commission within the government of China and a labor union for ZMC parent company Zhejiang Sunny I/E Corp. Commerce found that Sunny's government-run employee stock ownership committee (ESOC) runs this labor group.

Judge Gary Katzmann initially remanded ZMC's case to Commerce for the agency to reconsider evidence it had previously rejected concerning the link between the labor union and the ESOC. Commerce still decided that the government had the ability to control ZMC.

Commerce found that Sunny's trade union was a subsidiary of the All-China Federation of Trade Unions -- the only legally allowed trade union in China. CIT backed Commerce's finding that ZMC failed to rebut such control because “(1) the ACFTU has a ‘legal monopoly on all trade union activities;’ (2) ‘[t]he Chinese government prohibits independent unions;’ and (3) the ACFTU ‘preside[s] over a network of subordinate trade unions.'”

Commerce also established a link between the trade union and the ESOC. Since all individual members of the ESOC were members of Sunny's labor union, the Chinese Communist Party controlled Sunny, Commerce said. ZMC's challenge to Commerce's findings fell short since its arguments were “largely based on its disagreement with Commerce’s separate rate analysis, which presumes that an entity is subject to potential or actual government control unless a respondent can rebut that presumption by showing independence in each of four indicators analyzed by Commerce,” Katzmann said.

“Commerce’s conclusion that ZMC failed to rebut the presumption of de facto government control through the connection between Sunny’s labor union and the ESOC does not require a showing of actual control, but simply a potential for government control,” the judge said.

(Zhejiang Machinery Import & Export Corp. v. United States, Slip Op. 21-78, CIT # 19-00039, dated 06/23/21, Judge Katzmann. Attorneys: Adams Chi-Peng Lee of Harris Bricken for plaintiff Zhejiang Machinery Import & Export Corp.; Kelly Krystyniak for defendant U.S. government)