‘And’ Doesn't Mean ‘Or,’ Thai Wheel Importer Says of Commerce’s Read on AD/CVD Scope

An importer and plaintiff-intervenor in an ongoing case regarding Thai steel truck wheels said Feb. 13 that the Commerce Department was ignoring the plain language of a scope of the relevant antidumping and countervailing duty orders to find its products were in-scope (Asia Wheel Co. v. U.S., CIT # 23-00143).

Like Asia Wheel (see 2401310069), importer ZC Rubber America seeks to overturn the Commerce's 2021 scope ruling that found the manufacture of steel truck wheels in Thailand with either Chinese-origin rims or discs subjects Asia Wheel’s products to 2019 AD/CVD orders on steel wheels between 22.5 to 24.5 inches in diameter from China. Those 2019 AD/CVD orders were accompanied by a clarifying memo that said that wheels made in third countries had to have both rims and discs from China to be covered, Asia Wheel and ZC Rubber have pointed out.

By reversing course, Commerce unlawfully expanded the scope of the AD/CVD orders, ZC Rubber said. The department’s determination that the scope language was ambiguous was wrong, as the scope’s plain language refers to “rims and discs from China,” the importer said.

“The plain language of the scope is unambiguous and provides that if a truck wheel is assembled in a third country, the wheel is subject to the AD and CVD Orders only if both the rims ‘and’ discs are from China,” it said. “‘And’ does not mean ‘or,” it added, citing the 2012 case Adams v. U.S. Forest Serv.

It also said Commerce “unreasonably denied” that it had found wheels with only Chinese-origin rims or discs were outside the scope, contrary to the 2019 scope memo.

Like Asia Wheel, ZC Rubber also took aim at Commerce’s “substantial transformation” analysis of the wheels, saying that the department “failed to comply with the agency’s duty to consider the merchandise in the condition in which it is imported.”

The U.S. Court of Appeals for the Federal Circuit has held that substantial transformation analyses are used to determine originating countries for “imported articles,” ZC Rubber said. It said the “‘imported article’ whose origin is at issue” is the Thai truck wheels, not the wheels’ Chinese-origin discs. Commerce, it said, was looking only to the discs, not the entire wheels.

It also cited another case in which, it said, the court found Commerce focused too much on the physical characteristics of one component of an imported product rather than looking at the product as a whole. In that case, CIT overruled Commerce’s finding that an imported strike pin anchor had similar physical characteristics to a steel nail and thus was covered by an AD order on steel nails from China, it said. The court instead ordered that Commerce had to look not only at the pin itself, but “also the anchor body, the hex nut and the flat washer,” the product’s other components.

ZC Rubber also said Commerce was wrong to impose AD/CVD duties on the “entire finished wheel[s]” it imported, rather than on only their Chinese-origin discs. The discs are the only components actually subject to the orders, it said.

“If the Chinese-origin discs did not lose their identities after being converted into a finished wheel, the Thai-origin rims also did not lose their identities and remain products of Thailand,” the importer said. “Under this analysis, only the Chinese origin discs could be reasonably covered by the AD and CVD Orders.”

Finally, ZC Rubber claimed Commerce violated its rights to due process by not providing importers adequate notice that their wheels could be covered by the orders until “the date on which Commerce initiated a scope inquiry to address this very question.” Importers are supposed to have “fair warning” their merchandise may be covered by AD/CVD, it said.