Commerce Drops Chinese Gov't Control Finding for Pirelli for First 10 Months of AD Review Period

Pirelli Tyre Co. properly showed that it was not under Chinese government control for the first 10 months of an antidumping review period and thus subject to a separate rate analysis, the Commerce Department said in its Dec. 3 remand results submitted to the Court of International Trade. Since a Chinese company bought Pirelli in the 10th month of the review, though, the company is considered under Chinese government control from that point forward. The case had been remanded so that Commerce could reconsider the first 10 months of the review, before the sale (Qingdao Sentury Tire Co., Ltd., et al. v. United States, CIT Consol. # 18-00079).

The case concerns the administrative review of the antidumping duty order on passenger vehicle and light truck tires from China, covering the period Jan. 27, 2015, to July 31, 2016. In the underlying review, Commerce denied Pirelli's application for separate rate status since the company failed to rebut the presumption of de facto government control by the Chinese government. This was due to Chinese company Chem China purchasing Pirelli in the middle of the review period. The purchase took place Oct. 20, 2015. In the previous decision in the case, Judge Jennifer Choe-Groves sustained this denial.

On remand, Pirelli applied for partial separate rate status for the first 10 months of the review when it was an Italian company. Commerce denied this request, finding that Pirelli failed to give complete ownership information during the period of review. Choe-Groves, though, ruled against the U.S., finding that "Commerce neglected to follow its own practice to first determine whether Pirelli was wholly foreign-owned or located in a market economy during the first ten months of the period of review."

Commerce then issued a questionnaire to Pirelli to find out whether the Chinese government controlled the company before the sale to Chem China. The agency concluded the Chinese government neither de facto nor de jure controlled the company. On the de jure finding, Commerce said that Pirelli has no "(1) restrictive stipulations associated with its exporter’s business and export licenses; (2) legislative enactments decentralizing it; or (3) formal measures by the government decentralizing control of it."

In the de facto government control analysis, Commerce found that a review of Pirelli's purchase agreements, board of directors meeting minutes and financial statements show no Chinese government involvement in how the company "(1) sets export prices; (2) negotiates and signs contracts and other agreements; (3) selects management; (4) retains the proceeds of its export sales and makes decisions regarding disposition of profits or financing of losses." But, after Chem China bought the company, this all changed. For the first 10 months of the review period, Pirelli's weighted-average dumping margin would drop from 76.46% to 1.45% if the remand results are sustained. Pirelli signed off on the remand results in its comments on the draft remand redetermination.