Turkish Exporter Makes Case at CAFC Against Deduction of Section 232 Duties

The Commerce Department cannot deduct Section 232 national security duties from antidumping duty respondent Borusan Mannesman's U.S. price because the duties are remedial, temporary and deducting them would count as a double remedy, making them unlike normal customs duties, the respondent argued. Filing a reply brief Aug. 4 at the U.S. Court of Appeals for the Federal Circuit, the respondent said Commerce failed to conduct a "fulsome analysis" of whether the Section 232 duties are more like normal customs duties or to special duties, like Section 201 safeguards, and instead "confined its analysis" to finding distinctions between Section 232 and Section 201 duties. The agency also failed to acknowledge the "legal and constitutional distinction between regular duties imposed by Congress" and special duties imposed by the president (Borusan Mannesmann Boru Sanayi ve Ticaret A.S. v. U.S., Fed. Cir. #21-2097).

The case, originally brought to the Court of International Trade, challenges Commerce's final results in the administrative review of the ADD order on circular welded pipe and tube from Turkey. Borusan challenged Commerce's decision to reduce its U.S. price by the amount of Section 232 duties it paid on its exports. The trade court said because the statute is ambiguous, Commerce is entitled to deference on the issue (see 2201190040).

Borusan took its case to the Federal Circuit, challenging Commerce's position that Section 232 tariffs are normal customs duties rather than special duties for purposes of antidumping law and can thus be deducted from the U.S. price -- a position adopted by many plaintiffs at CIT and the Federal Circuit. To determine the difference between the two types of duties, Commerce looks at whether the duty is remedial, temporary and if deducting it imposes a double remedy -- one as the duty itself and again in the form of a dollar-for-dollar increase in the antidumping duties collected without the Section 232 remedy. If the agency answers in the affirmative on all three points, the duty is a special duty and cannot be deducted.

Commerce has repeatedly found Section 232 duties aren't remedial or temporary and won't impose a double remedy if deducted and thus can be deducted from the U.S. price. The agency centers its analysis on a previous finding, sustained by the Federal Circuit, which found that the Section 201 safeguards are special duties and cannot be deducted. Borusan in its Aug. 3 reply first took issue with Commerce's analysis, which the company says fails to analyze these standards but merely tries to differentiate the Section 232 duties from the Section 201 duties.

"Commerce provided no meaningful explanation or analysis of why the differences it cited would support the conclusion that section 232 duties are more akin to regular customs duties than to the types of remedial duties that Commerce had previously recognized as special duties that should not be subtracted in the dumping calculation," the brief said.

In its analysis, Commerce said the national security purpose of the duties means they're not remedial. Borusan, though, counters that all this does is show at most that "the particular remedial purpose of section 232 differs from that of other trade remedy statues," and that the agency never explains why the purpose of the duties renders them more like ordinary import duties. The plaintiff said the duties are indeed remedial and the national security purpose is fulfilled through being remedial to the domestic steel and aluminum industry. Trying to show differences between Section 201 and Section 232 duties on the question of remediality falls short, the brief said.

Borusan next said the duties aren't temporary, arguing they fall "squarely within" the definition of permanent duties because they have no express termination provision. Again, the government ignores the established framework, which says that duties are permanent unless modified by Congress, the respondent said. "There is no dispute that the section 232 duties are not permanent in the same way as ordinary customs duties," the brief argued. "They can be modified by the President at any time and for virtually any reason."

Turning to whether deduction of the duties would constitute a double remedy, Borusan said the U.S.'s analysis falls short. The U.S. pointed to the president's intention that the duties be imposed in addition to antidumping duties and the statutory interplay between Section 201 and antidumping law to distinguish the admitted double-counting of Section 201 duties from Section 232 double counting. This argument "fails to explain why it is consistent with the antidumping law to effectively double the amount of the section 232 duties imposed by the President," the brief said.

"Finally, the Government ignores the important legal and constitutional distinction between regular duties imposed by Congress pursuant to its exclusive constitutional power to lay and collect taxes and regulate international trade, and the special duties imposed by the President under express, but limited, authority delegated by Congress. Rather than meaningfully address this argument, the Government merely falls back on the argument that the term 'U.S. import duties' is ambiguous, and that nothing in the legislative history indicates that its statutory interpretation would be 'impermissible.' This misses the point."