Commerce Reverses Position on AD Respondent Collapsing in Line With CAFC Mandate

The Commerce Department reversed its decision to collapse two mandatory respondents and one of their affiliates in an antidumping duty investigation. In a bid to bring its stance in line with the U.S. Court of Appeals for the Federal Circuit, Commerce said in Feb. 14 remand results submitted to the Court of International Trade that evidence to collapse all three entities was insufficient, particularly because evidence from the two mandatory respondents didn't show any common ownership. The agency also reinstated its use of adverse facts available over one of the respondents' reporting of its products' yield strength (Prosperity Tieh Enterprise Co., Ltd. v. United States, CIT #16-00138).

The case concerns the AD investigation into corrosion-resistant steel (CORE) products from Taiwan, in which Prosperity and Yieh Phui Enterprise Co. (YP) served as two mandatory respondents. In the investigation, Commerce initially decided to treat YP and its affiliate, Synn Industrial Co., as a single entity. The agency then decided to collapse Yieh Phi and Synn with Prosperity. After a challenge was filed at CIT by Prosperity and YP, the trade court sustained the decision.

The Federal Circuit, however, said that Commerce didn't engage in a permissible analysis when collapsing the respondents. Judge Timothy Stanceu remanded the case 14 months after the appellate court decision, instructing the agency to make corrections in line with the appellate court's findings.

When collapsing two companies, Commerce must consider three factors: the companies must be "affiliated" as defined by the law, the producers must have production facilities for similar products that wouldn't require serious retooling and there must be a "significant potential for the manipulation of price production." While Commerce doesn't need to establish all three of these factors, it must consider the totality of the evidence when making its decision, the Federal Circuit said.

Commerce found that it could collapse Prosperity and YP/Synn due to a failure to establish the third factor cited by the Federal Circuit. While the agency already looked at the relationship between Prosperity and Synn, the Federal Circuit said Commerce had to look at the relationship between Prosperity and YP.

"First, Prosperity and Yieh Phui do not share any significant common ownership, and there is no overlap in their largest shareholders," the remand results said. "Second, none of Prosperity or Yieh Phui’s managers and directors serve as managers or directors of the other firm. Third, the record does not reflect that the operations of Prosperity and Yieh Phui are intertwined in any way; specifically, the firms do not share sales information, have no involvement in each other’s production and pricing decisions, do not share facilities or employees, and had no significant transactions with each other."

On the AFA question remanded by the Federal Circuit, Commerce in a one-paragraph analysis reinstated its initial imposition of AFA regarding Prosperity's misreporting the yield strength of its CORE products.