Trade Court Says Pirelli Not Owned by Chinese Gov't for First 10 Months of AD Review

The Court of International Trade in a May 19 opinion upheld the Commerce Department's remand results in an antidumping duty case, finding that exporter Pirelli Tyre wasn't controlled by the Chinese state for the first 10 months of the AD review. Ten months into the review, Chinese company Chem China bought Pirelli, but Commerce originally held that Pirelli was owned by the Chinese government for the entire review. On remand, the agency said Chem China didn't own Pirelli for the first 10 months, giving the exporter a 1.45% dumping rate for this period.

The case concerns the administrative review of the antidumping duty order on passenger vehicle and light truck tires from China, covering the period Jan. 27, 2015, to July 31, 2016. In the underlying review, Commerce denied Pirelli's application for separate rate status since the company failed to rebut the presumption of de facto government control by the Chinese government. This was due to Chinese company Chem China purchasing Pirelli in the middle of the review period. The purchase took place Oct. 20, 2015. In the previous decision in the case, Judge Jennifer Choe-Groves sustained this denial.

On remand, Pirelli applied for partial separate rate status for the review's first 10 months when it was an Italian company. Commerce denied this request, finding that Pirelli failed to give complete ownership information during the period of review. Choe-Groves, though, ruled against the U.S., finding that Commerce failed to follow its own practice to first find whether Pirelli was wholly foreign-owned or located in a market economy during the first 10 months of the review (see 2109240072).

Commerce then issued a questionnaire to Pirelli to find out whether the Chinese government controlled the company before the sale to Chem China. The agency concluded Chinese government control was neither de facto nor de jure (see 2112060028). In the de facto government control analysis, Commerce found that a review of Pirelli's purchase agreements, board of directors meeting minutes and financial statements show no Chinese government involvement in how the company "1) sets export prices; (2) negotiates and signs contracts and other agreements; (3) selects management; (4) retains the proceeds of its export sales and makes decisions regarding disposition of profits or financing of losses."

After Pirelli signed off on the remand, Choe-Groves upheld the decision, resolving all contested issues in the case. The judge said Commerce's positions are backed by substantial evidence -- particularly its point that Chem China didn't influence any of Pirelli's major business operations prior to the sale, especially given its minority shareholder position from Aug. 11, 2015 to Oct. 19, 2015.

"In other words, Commerce found no information on the record to indicate that the Government of China’s minority shareholding in Pirelli & C. S.p.A. or its ability to appoint a small number of Pirelli & C. S.p.A.’s board members enabled any Chinese government entity to control Pirelli Tyre Co. directly or indirectly during the period from August 11, 2015 through October 19, 2015," the judge said. Choe-Groves then sustained the 1.45% dumping rate for Pirelli for the first 10 months of the review.

(Qingdao Sentury Tire v. U.S., Slip Op. 22-48, CIT Consol. #18-00079, dated 05/19/22, Judge Jennifer Choe-Groves. Attorneys: Daniel Porter of Curtis Mallet-Prevost for consolidated plaintiffs Pirelli Tyre Co., et al.; Ashley Akers for defendant U.S. government)