Commerce Properly Backed Anti-Circumvention Position on CORE From China, US Firm Tells CAFC

The U.S. Court of Appeals for the Federal Circuit should affirm the Commerce Department's finding that Al Ghurair Iron & Steel circumvented the antidumping and countervailing duties on corrosion-resistant steel (CORE) products from China by way of transshipment via the United Arab Emirates, defendant-appellee Steel Dynamics said March 14 in a reply brief filed with the appeals court. The UAE company's processing was minor or insignificant, marked by a low level of investment in the UAE, Steel Dynamics said (Al Ghurair Iron & Steel v. United States, Fed. Cir. #22-1199).

The Court of International Trade upheld the circumvention ruling in October 2021 (see 2110050065). In the underlying inquiry, Commerce said that AGIS's level of investment and production facilities in the UAE are minor and that the value of processing in its UAE plant represents only a small portion of the value of its CORE shipped to the U.S. AGIS had challenged these positions along with Commerce's contention that AGIS bought Chinese hot-rolled steel and cold-rolled steel substrate. AGIS appealed to the Federal Circuit.

The UAE company said in its opening brief that the record shows that its facility in the UAE is "large" and "sophisticated" and the product of "significant investment" (see 2202150053). In the brief, AGIS detailed the investment it made in its facility along with all of the processes the facility houses, in a bid to show the court that the company does not merely finish CORE products but actually manufactures the good. In the investigation, Commerce compared AGIS's investment in its facilities with the average expenditure for the construction of integrated HRS mills in China.

In the face of AGIS's challenge, Steel Dynamics defended the practice, arguing that Commerce is not required to consider AGIS's production facilities "on their own in isolation." The comparison was "reasonable to assess the relative size of the UAE operations in the context of the complete production process," the appellee said. In fact, instead of comparing the production processes with Chinese HRS and CRS producers, AGIS is seeking to compare itself to "straw man products from a completely different investigation," the brief said.

"Nothing in the statute or the legislative history puts a threshold or cap on the level of third-country investment over which evasion is permitted," Steel Dynamics said. "Applying such an exclusionary rule would not only undermine the circumvention statute but also contravene the Congressional intent underlying the circumvention statute."

In the inquiry, Commerce found that AGIS's UAE operations reflected only a small proportion of the value of the CORE imported to the U.S. Contrary to AGIS's position, nothing in the statute nor congressional intent mandates that Commerce identify a threshold or bright line and apply it when running a value-added analysis, Steel Dynamics argued. "Commerce’s decision that the process of assembly or completion in the UAE was minor or insignificant was made after 'reviewing each factor under section 781(b)(2) of the Act … [and was] based on the totality of the evidence,'" the brief said. "This analysis must be afforded a great deal of discretion. In fact, Commerce’s analysis of each factor supported one conclusion: that the process of assembly or completion in the UAE was minor or insignificant."

Lastly, Steel Dynamics touched on Commerce's selection of the time periods to compare and its finding that the patterns of trade regarding CORE backed its circumvention decision, based on substantial evidence. Commerce picked equal time periods before and after starting the investigations of CORE for its analysis, the appellee argued. "AGIS has not shown and cannot show that Commerce’s approach and its selection of the comparison time frames represent an unreasonable application of the statute," the brief said.