Japanese Exporter Challenges CAFC Precedent on Deduction of Section 232 Duties From US Price

The Court of International Trade need not be bound by the a U.S. Court of Appeals for the Federal Circuit ruling that said Section 232 duties are "United States import duties" that can be deducted from U.S. price, exporter Nippon Steel Corp. argued in a Dec. 22 reply brief (Nippon Steel Corp. v. United States, CIT # 21-00533).

The Federal Circuit in Borusan Mannesmann v. U.S. didn't consider whether interpreting Section 232 duties as U.S. import duties is reasonable where this interpretation "may violate the United States' treaty obligations," the Japanese exporter argued. The appellate court's ruling "was also wrong" since it never looked to "Congress's intent" in interpreting the phrase "United States import duties" in the antidumping duty statute, and instead "focused solely and incorrectly on the President's authority under Section 232" and intent in imposing the Section 232 steel and aluminum duties.

During Nippon Steel's case, which contests the third review of the AD order on hot-rolled steel flat products from Japan, the U.S. said the Federal Circuit "unequivocally held" that Commerce could deduct Section 232 duties from U.S. price in AD cases (see 2311200080). In response, Nippon Steel said that the Federal Circuit failed to apply the Charming Betsy canon, which says an act of Congress "ought never to be construed to violate the law of nations if any other possible construction remains."

Interpreting U.S. import duties to include the national security tariffs "raises serious questions concerning whether the United States would be violating its obligations to Japan under" the General Agreement on Tariffs and Trade.

The Federal Circuit also failed to take into account congressional intent in including Section 232 duties as U.S. import duties. While the government highlights the national security objectives of Section 232, "it is undeniable that the Section 232 steel duties were premised, at least in part, on similar kinds of injury to U.S. industry that underlie [antidumping/countervailing/safeguard] duties, and therefore the Section 232 steel duties also have remedial objectives," the brief said.

Nothing shows what Congress meant by the term "United States import duties" when the Section 232 duties have "both national security and remedial objectives." As a result, even if the president meant for the duties to be read as U.S. import duties, this interpretation "cannot be correct," the brief said.

Nippon Steel also responded to a claim from petitioner Nucor Corp. that the exporter failed to sufficiently plead this claim in its complaint. The petitioner claimed that Nucor must argue its case "with sufficient allegations" to bring the case "above the speculative level." Nippon Steel put forward no particular facts that lead one to find that the exporter's U.S. prices were duty-inclusive, the petitioner said.

In response, Nippon Steel argued that the complaint did not need to provide a detailed factual allegation but simply give the grounds for relief and allow the court to reasonably infer the alleged misconduct.