Trade Court Sends Back Affiliation Analysis in AD Review on Thai Pipes

The Commerce Department didn't properly apply the "proper statutory test for affiliation" between antidumping duty respondent Saha Thai Steel Pipe Public Co. and one of its customers, BNK Steel Co., the Court of International Trade ruled in a Nov. 13 opinion. Judge Stephen Vaden said that Commerce, as part of the 2019-20 AD review of circular welded carbon steel pipes and tubes from Thailand, erred in basing its finding of affiliation between the two companies on a single shared human resources manager and the mere speculation that there could have been other ties between the companies.

The judge held that "bare speculation" is not evidence of affiliation, adding that the agency "is required to find whether two entities are affiliated." Instead of trying to explain how the shared employee meets the statutory test, Commerce instead said it can't find that Saha Thai is necessarily not affiliated with the customer. "'Necessarily not affiliated' is not the statutory standard; it is instead Commerce's attempt to dodge the standard," Vaden said.

In rejecting the affiliation analysis, the judge cited Commerce's other affiliation analyses in the review regarding Saha Thai and six other of its customers. There, Vaden sustained the agency's affiliation determinations, based on adverse facts available, since the respondent failed to report these companies as affiliates when clearly given multiple chances to do so. The court differentiated these six analyses from the lone BNK analysis on the grounds that, with regard to the six affiliates, "Commerce could point to shared ownership interests and shared directors as facts meeting the affiliation standard."

Saha Thai reported that it is 16.68% owned by the Ratanasirivilai family and 24.32% by the Karuchit family -- each of which has two members serving as corporate directors. After not reporting its affiliates in its Section A questionnaire response, Commerce found that the respondent did in fact have affiliated customers based on information from the AD petitioner, Wheatland Tube. The petitioner said that four of Saha Thai's home market customers are affiliated with the exporter via majority stock ownership and board membership of the Ratanasirivilai family, adding that the Khruchit family are shareholders of another of Saha Thai's home market customers. Wheatland also said that one of the directors of Saha Thai is also a director of a sixth affiliated customer.

Commerce used this information as AFA to find that Saha Thai was affiliated with the six customers. The exporter's counsel conceded at oral argument in the case that the company should have disclosed these affiliates during the review. As a result, Vaden sustained the use of AFA in the affiliation findings, adding that there was sufficient evidence to do so.

In its defense, Saha Thai said that the missing information regarding the affiliates wasn't needed since Commerce could have marked the six companies as affiliated in the sales database and calculated the AD margin without further information. Vaden dubbed this defense "sophistry." Even accepting this claim, the agency "lacked the data necessary to flag the companies as affiliates until Wheatland Tube provided the rest of the story," the opinion said.

Vaden also remanded the case so Commerce could reconsider the scope of the AD order once the U.S. Court of Appeals for the Federal Circuit issues its decision in a separate scope case, also brought by Saha Thai. The court remanded the case on this issue at Commerce's request. The only question regarding this issue was whether the doctrine of administrative exhaustion barred Saha Thai from raising the scope problem given that it did not raise the point administratively. The court, and even the U.S. "[a]fter much throat-clearing," sided with Saha Thai that the pure question of law exception to administrative exhaustion excuses the company's failure to raise the question.

(Saha Thai Steel Pipe Public Co. v. United States, Slip Op. 23-158, CIT # 21-00627, dated 11/13/23; Judge: Stephen Vaden; Attorneys: Daniel Porter of Curtis Mallet-Prevost for plaintiff Saha Thai Steel Pipe Public Co.; Robert Gosselink of Trade Pacific for plaintiff-intervenor Thai Premium Pipe Co.; Elizabeth Speck for defendant U.S. government; Robert DeFrancesco of Wiley Rein for defendant-intervenor Nucor Tubular Products; and Elizabeth Drake of Schagrin Associates for defendant-intervenor Wheatland Tube Co.)