DOJ Backs Use of AFA in Finding Separate AD Rates Despite Full Cooperation

The Department of Justice backed the Commerce Department's decision to hit antidumping duty review respondent Jilin Forest Industry Jinqiao Flooring Group with the China-wide dumping rate despite its full cooperation in the review, in a Jan. 14 brief at the Court of International Trade. DOJ said that after looking at Jinqiao Flooring's ownership makeup, the respondent failed to rebut the presumption of government control and that the U.S. Court of Appeals for the Federal Circuit has upheld Commerce's bid to use an adverse facts available rate for a separate rate respondent despite its full cooperation (Jilin Forest Industry Jinqiao Flooring Group v. U.S. , CIT #18-00191).

The case concerns the 2015-16 administrative review on multilayer wood flooring from China, wherein Commerce had found Jinqiao Flooring under de facto government control following a change in policy, after having assigned it individual rates in previous reviews. In the first opinion in the case, Judge Richard Eaton said Commerce failed to adequately explain why it applied the policy to Jinqiao Flooring since it was meant to incentivize greater compliance in AD proceedings (see 2104300079). The judge told Commerce that if it wanted to stick with its non-market economy (NME) policy, it would have to explain much more about how it came to its decision, including an explanation of the purpose of the policy itself.

Then, the Federal Circuit, in an unrelated case, said that country-wide rates assigned in NME cases are individual rates, rather than "all-others" rates as provided for in the statute (see 2106100044). In its remand results, Commerce said that the state's role in the economy results in "fundamental distortions" in the economy, giving the agency cover to stick with its decision on remand to assign Jinqiao Flooring the China-wide rate (see 2111160069).

Jinqiao Flooring argued that it rebutted the presumption of government control and that the court acknowledged this allegedly unfair application of AFA (see 2112170030). In response, DOJ said that based on its analysis of Jinqiao Flooring's ownership structure, it is de fact controlled by the Chinese government. For instance, Jinqiao Flooring said that its evidence shows its export activities were controlled by the board of directors and the company's labor union. DOJ said this fails to rebut the presumption of government control since both the labor union and the majority shareholders that appoint the board of directors are controlled by the Chinese state.

Jinqiao Flooring also said that there is no evidence showing that the labor union was controlled by the Chinese government. "However, this argument ignores the stated role, as provided for in 19 U.S.C. § 1677(18)(C)(i), of Commerce’s China NME status determination," the brief said. Commerce has previously said that labor unions in China are controlled by the All-China Federation of Trade Unions -- a government-affiliated program, it said.

DOJ also relied on the Federal Circuit decision in China Manufacturers Alliance v. U.S. to back its position that separate rate respondents can get hit with AFA. "The Federal Circuit did not limit this holding to any particular set of facts," DOJ said. "It did not hold that Commerce may carry forward an initial rate for the NME-wide entity with adverse inferences only if Commerce updates the rate for the NME-wide entity to reflect, in part, a calculated weighted-average dumping margin for the mandatory respondent deemed part of the NME-wide entity. ... Rather, the court recognized that Commerce may base the rate for the NME-wide entity 'in whole or in part' on facts available or adverse facts available and apply that rate to a cooperative mandatory respondent that has failed to demonstrate its independence from control of the government in a subsequent segment of the proceeding."