Trade Court Sends Back Elements of CVD Review of Vietnamese Wind Towers

The Court of International Trade remanded parts of the 2018 countervailing duty review on utility scale wind towers from Vietnam in a March 24 opinion made public April 4. Judge Timothy Reif sent the case back to the Commerce Department for it to address evidence submitted by the CVD petitioner Wind Tower Trade Coalition over alleged manipulation of the denominators used in the benefit calculation and to substantiate its conclusion that respondent CS Wind Vietnam didn't import its steel plate, thereby neglecting an import duty exemption subsidy.

“The Wind Tower Trade Coalition welcomes the CIT’s decision to remand the Commerce Department’s final determination," said Maureen Thorson, counsel for WTTC, in an email. "The remand will provide the Coalition an opportunity to further argue that Commerce’s original decision does not fully recognize the degree to which Vietnam subsidizes its wind tower industry.”

WTTC filed its suit to primarily contest two elements of the CVD review: the denominator in the subsidy calculation and Commerce's use of certain evidence for its subsidy calculation for the Import Duty Exemptions on Imports of Raw Materials for Exporting Goods program. Finding mixed success in the lengthy opinion, WTTC also saw the trade court sustain the agency's positions relating to its decisions not to apply adverse facts available (AFA) over the Import Duty Exemptions program and to use the sales of CS Wind Korea -- CS Wind Vietnam's parent company -- for the subsidy calculation.

On the latter point, Commerce found that CS Wind Vietnam was the manufacturer with sales conducted by CS Wind Korea, so the agency used the parent company's sales for the denominator of the subsidy calculation. The U.S. characterized WTTC's challenge of this move as amounting to whether the subsidy should have been attributed to the sales value of products made by CS Wind Vietnam and exported by CS Wind Korea or to the amount of a tolling fee for processing services.

The judge found that Commerce properly used CS Wind Korea's sales, acting consistently with its regulations and past cases in doing so. "In this case involving a cross-owned corporation, Commerce’s regulations require that Commerce attribute the subsidy to the 'products,' which were the wind towers produced by CS Wind Vietnam, which -- as a 'corporation' under Commerce’s regulations, received the subsidy from the [Government of Vietnam]," the opinion said. "Therefore, the denominator of the subsidy rate calculation was required to -- and did -- reflect the 'sales value' of the wind towers."

Where Commerce erred, however, was in failing to respond to WTTC's argument that CS Wind Vietnam manipulated the duty rate by restructuring sales transactions and shifting a majority of its revenue and profits from Vietnam to South Korea. The judge said Commerce didn't address the argument that using CS Wind Korea's sales value could allow CS Wind Vietnam to manipulate the CVD rate.

The court sent the case back to Commerce to "(1) discuss and address the evidence that WTTC presented as related to manipulation; (2) address WTTC’s manipulation argument as to the denominator used in the benefit calculation; and (3) explain whether Commerce considered manipulation in reaching its determination, or if it did not, why it did not."

WTTC further challenged whether Commerce properly found if CS Wind Vietnam's steel plates originated in Vietnam or were imported. If the plate wasn't imported, this could ignore a benefit through the Import Duty Exemptions program, the plaintiff said. In all, WTTC argued that Commerce disregarded contrary evidence that the plate was imported, failed to address relevant arguments of the parties by not fully investigating the origin of the steel plate inputs and failed to use partial AFA over withheld information from CS Wind Vietnam.

Reif said Commerce didn't substantiate its conclusion that CS Wind Vietnam didn't import steel plate in light of the detracting evidence that included the most favored nation rate for the steel plate. On remand, Commerce must substantiate its conclusion that CS Wind Vietnam didn't import the steel plate "state the salience, if any, of the MFN rate to its determination that the raw material inputs in question came from Vietnam," Reif said, and "explain why it has listed an MFN tariff rate in its calculations of the Import Duty Exemptions program for the line entries of the raw material inputs in question that also are listed as having a country of origin of Vietnam."

(Wind Tower Trade Coalition v. United States, Slip Op. 22-27, CIT #20-03692, dated 03/24/22, Judge Timothy Reif. Attorneys: Maureen Thorson of Wiley Rein for plaintiff Wind Tower Trade Coalition; Joshua Kurland for defendant U.S. government)