CIT Upholds ITC's Retroactive Application of AD/CVD Given Surge of Small Engine Imports

The International Trade Commission legally applied retroactive antidumping and countervailing duties on imports of small vertical shaft engines from China, the Court of International Trade said. In a March 16 opinion, Judge M. Miller Baker said the "court will not second-guess" the ITC's decision, which found that the retroactive duties were justified because of a surge in imports of the engines just before the antidumping and countervailing duties took effect.

The importer, MTD Products, argued that the ITC used faulty data and improperly weighed the data it did use. It also said the ITC based its findings on export data subject to large lead times, inaccurate comparison periods and artificial increases in volume caused by the COVID-19 pandemic.

But Baker disagreed with MTD, including its claim that the ITC's critical circumstances decision must be based only on import data. Although MTD said a finding based on anything else "is inherently speculative, suspect, and unsustainable,” Baker said nothing in the statute prevents the ITC's "broad discretion to consider data reasonably relevant to determining the 'timing and volume of imports.'" The Trade Act of 1930 tells the ITC to consider, "among other factors," any other circumstances showing that the remedial effect of the orders will be undermined.

MTD also argued the Chinese exporter data didn’t account for the exports’ 90- to 120-day lead times. But Baker said the ITC addressed this argument when the commission found that the critical circumstances data and lead times are based on monthly exports to the U.S. reported by a group of related exporters known as the Zongshen Companies. The data does not reflect shipment times from Zongshen.

"The agency thus considered MTD’s arguments and gave a reasonable explanation for rejecting them based on the evidence in the record," the opinion said. "Under the substantial evidence standard of review, that suffices."

MTD also said the ITC illegally based parts of its finding on artificial increases in volume due to COVID-19, finding that January to March factory shutdowns didn’t appear to affect its exports to the U.S. The commission said the exports were higher in this period than during the same time in 2019, also noting that MTC placed orders with Zongshen after the petition was filed, with those orders arriving in the U.S. during May through August 2020. Baker said the ITC's explanation was "reasonable."

The judge also addressed MTD's challenge of the commission's conclusion that the imports made before the provisional relief undermined the remedial effect of the AD/CVD orders. The surge in imports before the orders came into effect were "custom-made, non-fungible products," MTD said, which were not stockpiled "and thus were unavailable for such tactics."

The ITC said petitioner Briggs & Stratton could make, and did make, small vertical shaft engines suitable for MTD, also noting the "unusual timing" of the import surge. The surge occurred at a time when imports of these engines does not normally increase and when U.S. consumption of these goods declines. The time period is also one when domestic buyers negotiate prices for engines to be delivered during the next year's lawn mower season.

Baker said the statute requires the ITC to only assess whether the imports "are likely to undermine seriously the remedial effect[s]" of the duties. "In other words, the Commission makes an informed judgment in advance," the opinion said. "The court need not decide whether the import surge did, in fact, seriously undermine the orders’ remedial effects because even if it did not, that fact would not invalidate the Commission’s finding under the statute." As a result, the ITC "amply" explained why a surge in the imports threatened to undermine the orders' remedial effect, the judge said.

(MTD Products v. United States, Slip Op. 23-34, CIT # 21-00264, dated 03/16/23; Judge M. Miller Baker; Attorneys: Alex Schaefer of Crowell & Moring for plaintiff MTD Products; Henry Smith for defendant U.S. government; Clint Long of King & Spalding for defendant-intervenor Briggs & Stratton)