UAE Exporter Blasts US Defense of Anti-Circ Inquiry on CORE From China at Federal Circuit

Defendant-appellees in an anti-circumvention case at the U.S. Court of Appeals for the Federal Circuit employ a "'pay no attention to what's behind the curtain' approach" as it relates to exporter Al Ghurair Iron & Steel's (AGIS) level of investment in the United Arab Emirates, AGIS argued in a June 1 brief. Replying to briefs from the U.S. and petitioner Steel Dynamics, AGIS said the appellees failed to show why enough evidence backs the Commerce Department's value-added calculations to justify the use of an unreasonable investment comparison methodology or to show that Commerce's disregard of numerous patterns of trade was reasonable (Al Ghurair Iron & Steel v. U.S., Fed. Cir. #22-1199).

The case concerns the anti-circumvention inquiry that found AGIS skirted antidumping and countervailing duties on corrosion-resistant steel (CORE) products from China via transshipment through the UAE. The Court of International Trade upheld the circumvention ruling in October (see 2110050065). In the underlying inquiry, Commerce said AGIS's level of investment and production facilities in the UAE are minor and 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). AGIS detailed the investment it made in its facility along with all the processes the facility houses, in a bid to show the court that the company doesn't merely finish CORE products but actually manufactures the goods. In its reply brief, AGIS reiterated some of the same arguments, telling the Federal Circuit the appellees ignore the exporter's production facilities, its cold-rolling lines, slitting or galvanizing lines, and its production equipment, capacities, actual production volume or labor force.

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 (see 2204280033). In its reply, AGIS said this defense is wrong for two reasons: it incorrectly presumes that CORE producers must make the HRS and CRS inputs used in CORE production and that production of HRS and CRS is a part of a continuum that results in the production of CORE merchandise.

"Neither presumption is correct," the brief said. "Commerce’s comparison of the investment required by an integrated Chinese producer of HRS and CRS inputs versus that required of a CORE producer that manufactures CORE from HRS and CRS therefore results in no meaningful or rational evaluation."

AGIS also objected to DOJ's contention that Commerce's value-added calculations are backed by substantial evidence. The exporter said the statute is "clear and unambiguous" in that the value-added provision refers to the value added to merchandise shipped to the U.S., whereas Commerce found the value of processing using a profit percentage based on AGIS's worldwide sales.

"Unfortunately, neither Defendant-Appellee explains Commerce’s rationale, and both leave it to the Court to search the record for an explanation that does not exist," the brief said. "In truth, Commerce never articulated at all why it based the profit component of value added on AGIS’s worldwide sales instead of on 'the merchandise imported into the United States.'"