Commerce's Anti-Circ Inquiry Into CORE From China in Line With Congressional Intent, DOJ Says

The Commerce Department's anti-circumvention inquiry into the antidumping and countervailing duties on corrosion-resistant steel (CORE) products from China did not violate the intent behind Congress' passage of the anti-circumvention statute, the U.S. said in an April 27 reply brief at the U.S. Court of Appeals for the Federal Circuit (Al Ghurair Iron & Steel v. United States, Fed. Cir. #22-1199).

Plaintiff and exporter Al Ghurair Iron & Steel (AGIS) argued that the intent of the law is to address only minor or screwdriver assembly operations and not "well-established operations" in a product's assembly, and that since its United Arab Emirates-based operations fit in the latter category, they are exempt from the inquiry. DOJ argued that this argument fails to see what may be construed as a minor operation depending on the product at issue, making AGIS's supposed circumvention of the AD/CVD orders commensurate with Congress' intent.

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 goods.

In the investigation, Commerce compared AGIS's investment in its facilities with the average expenditure for the construction of integrated HRS mills in China. The U.S. defended this practice, also characterizing AGIS's bid to merely show the size of its investment as failing to include any citation to law or analysis. The level of investment is only relevant so far as it is compared to the whole process for CORE production, the brief said. Commerce also based its decision on a prior circumvention inquiriy.

"While Commerce’s determinations in one circumvention inquiry are not binding on another, Commerce may nevertheless find those conclusions persuasive if, as in this case, it has a reasoned basis for doing so," the brief said. "On this record, Commerce found that the investment level and production process for completion of CORE does not vary significantly from country to country."

In its opening brief, AGIS further attacked Commerce's position relating to the value added to the production process by UAE producers in a way similar to its level of investment arguments. The exporter attempted to establish a "bright-line threshold" above which value-added and level of investment would be insignificant. "The plain language of the statute simply does not impose such a requirement," the brief said. "Imposing such a test would also be inconsistent with congressional intent."

Lastly, DOJ addressed AGIS's arguments over its pattern of trade analysis that looked at a 98-month period over the start of the AD/CVD inquiry. The exporter challenged the time period selected as unreasonable, arguing that the agency could've tapped other time periods. But, no legal support was cited for this argument, the brief points out. "As AGIS admits, the plain language of the statute, 19 U.S.C. § 1677j(b)(3)(A), does not require Commerce to employ any particular approach in its weighing of this factor."