Commerce to Reconsider Respondent Collapse in AD Case In Line With CAFC Mandate

The Commerce Department must reconsider its decision to collapse two mandatory respondents and one of their affiliates in an antidumping duty investigation on corrosion-resistant steel (CORE) products from Taiwan, the Court of International Trade ruled on Sept. 1, seeking to bring Commerce's results in line with a U.S. Court of Appeals for the Federal Circuit mandate. Judge Timothy Stanceu also ordered Commerce to use facts otherwise available with an adverse inference on one of the respondent's reporting of yield strength in the investigation.

Throughout the investigation, Commerce first decided to treat Yieh Phui and its affiliate, Synn Industrial Co., as a single entity. The agency also decided to collapse Yieh Phi and Synn with another company, Prosperity. In addition, Commerce said that Prosperity misreported the yield strength of some of its CORE sales, leading to the application of adverse facts available. The final dumping rate assigned to the collapsed entities was 10.34%.

The Federal Circuit addressed these two issues in its July 2020 opinion, finding that Commerce did not engage in a permissible analysis when collapsing the producers. The appellate court also overturned CIT's original ruling when it upheld Commerce's original use of AFA, holding that Prosperity failed to comply with Commerce's requests for information and misreported yield strength of the CORE sales.

Remanding the case in CIT 14 months after the Federal Circuit decision and 12 months after the mandate, Stanceu instructed Commerce to make corrections in line with the appellate court's findings. The Federal Circuit noted that collapsing requires a "'significant potential for manipulation of price or production," citing the preamble to Commerce's regulation. "The opinion of the Court of Appeals indicates a general disapproval of the Department’s resort to collapsing in instances in which the record evidence of such a potential does not meet this more demanding standard," Stanceu said.

The Federal Circuit also said that the original use of AFA on the misreported yield strength of the CORE sales should be upheld. "Disagreeing with this Court’s holding on the issue of yield strength reporting, the Court of Appeals concluded that the several examples in the questionnaire and memorandum “support[] Commerce’s finding that Commerce’s questionnaire sought yield strength information based on the ASTM industry standard,'" the opinion said. "... The Court of Appeals concluded that the evidence is cited is 'adequate to show that Prosperity misreported the yield strength of its sales and did not comply with Commerce’s requests for information.'"

So, "in accordance with the holding in Prosperity III, Commerce, in redetermining a margin for Prosperity, must reinstate its original determinations on these two issues," Stanceu said.

(Prosperity Tieh Enterprise Co., Ltd., et al. v. United States, Slip Op. 21-113, CIT Consol. # 16-00138, dated 09/01/21, Judge Stanceu. Attorneys: Donald Cameron of Morris Manning for plaintiff Prosperity; Kelly Slater of Appleton Luff for plaintiff Yieh Phui; Elizabeth Speck for defendant U.S. government)