Commerce Continues to Find Chinese Government Control Over Tire Companies

The Commerce Department continued to find that antidumping respondents Aeolus Tyre and Guizhou Tyre Co. were de facto controlled by the Chinese government, denying them separate rate status in Sept. 24 remand results filed at the Court of International Trade (Guizhou Tyre Co., Ltd. et al. v. United States, CIT Consol. #17-00100).

Aeolus and GTC, along with other Chinese exporters, challenged the final results of the seventh administrative review of off-the-road tires from China. In the review, Commerce determined that Aeolus and GTC failed to rebut the third prong of the government control test, which says that a respondent must have autonomy in making decisions on management.

In remanding the case, Judge Timothy Stanceu had said that Commerce failed to examine all four of the necessary criteria for establishing de facto control by the Chinese government (see 2105140025). Stanceu said that Commerce had determined that a lack of autonomy in management selections was the “factual equivalent of finding that the Chinese government controlled what commerce termed a company's 'export activities.'”

Commerce rebutted this contention, saying that “although our explanation could have been clearer, we respectfully disagree that Commerce need detail its evaluation of the record evidence with respect to all four factors in cases such as this.” Rather, all the agency needs to do is rebut one of the prongs of the de facto control analysis -- precisely what it did by establishing that the companies do not autonomously make management decisions. To the extent that Commerce said that this proves the respondents don't control export activities, this was not its intent, the agency conceded.

Nevertheless, Commerce looked at the evidence and conclusively held that the respondents could be found to have control over export activities. But since the third prong still failed for Aeolus and GTC, de facto control was not rebutted and separate rate status was denied.

“We continue to find that record information specific to each respondent reflects a measure of control on behalf of relevant [state-owned enterprise (SOE)] shareholders in the selection of the board of directors and management for each firm and, thus, does not adequately substantiate autonomy of each firm in the selection of directors and management during the [period of review (POR]), as corroborated by additional indicia of control generally ... as well as information regarding influence of the SOE-appointed board in GTC’s decisions regarding the disposition of profits,” the remand results said. “We determine this evidence to be sufficient to find that neither GTC nor Aeolus rebutted the presumption of government control or potential for control over their export functions.”