2 Pipe Fitting Importers Challenge Commerce's Substantial Transformation Analysis at CIT

Two importers took to the Court of International Trade to challenge the Commerce Department's final determination that Chinese-origin unfinished pipe fittings that undergo final processing in Vietnam are under the scope of the antidumping duty order on carbon steel butt-weld pipe fittings from China. The companies, International Piping & Procurement Group and Norca Industrial Co., said in a pair of complaints that Commerce's analysis, which found that the goods were not substantially transformed in Vietnam, was "flawed" and ignored key evidence (International Piping & Procurement Group v. United States, CIT # 23-00232) (Norca Industrial Co. v. United States, CIT # 23-00231).

This evidence showed that the essential character of a "butt-weld fitting" is imbued only following "beveling," which occurred in Vietnam, and that the "nature and sophistication of the third production stage performed in Vietnam is substantial." The complaints added that the level of investment in Vietnam is "significant," and that the relative costs percentage linked with the production stage in Vietnam is "significant."

The decision at issue was a scope referral made as part of an Enforce and Protect Act investigation conducted by CBP to find out whether rough and unfinished fittings from China, processed into butt-weld pipe fittings via two production scenarios in Vietnam, are covered by the AD order. Commerce said the goods that go through the first of these scenarios, processing in Vietnam, are covered by the order. The complaints say this decision was not based on substantial evidence, "was arbitrary and capricious, and was not otherwise in accordance with law."