US Tells CAFC Tire Exporter Confused State Control Presumption With Evidentiary Requirement

The U.S. told the U.S. Court of Appeals for the Federal Circuit in a Feb. 29 reply brief that exporter Guizhou Tyre offered a "confused rendition of" the Commerce Department's separate rate analysis, equating the presumption of foreign state control with the lower standard from the agency's "substantial evidence requirement." The government said that, contrary to Guizhou Tyre's claims, it's not Commerce's duty to affirmatively show an absence of Chinese state control (Guizhou Tyre Co. v. United States, Fed. Cir. # 23-2165).

The Federal Circuit's precedential holdings say the "burden is first on the respondent to demonstrate the absence of government control," DOJ said. Guizhou Tyre offered no authority showing that the "minimum quantum of evidence" standard should apply when a company rebuts the presumption of government control in a nonmarket economy nation "versus the substantial evidence standard," it said.

In its case, Guizhou Tyre claimed that Commerce used the wrong standard of review in assessing whether the company rebutted the presumption of foreign state control in the 2014-15 antidumping duty review on new pneumatic off-the-road tires from China and that the company offered enough evidence to rebut the presumption (see 2312040067). Guizhou Tyre centered its claims on the fact that it's only a minority state-owned firm and not majority state-owned.

In response, the U.S. said the record shows that Guiyang Industry Investment Group Co., which owns 25.20% of Guizhou Tyre and is the company's largest shareholder, is wholly owned by the Guiyang State-owned Assets Supervision and Administration Commission. The government said Guiyang Industry is the "only shareholder to own more than one percent of GTC's voting shares," supporting the notion of state control along with "additional indicia."

While Guizhou said it has safeguards in place through its Articles of Association, Commerce found those safeguards to be ineffectual in the present case since Guiyang Industry was "ultimately able to dominate GTC's decision-making process" and appoint preferred members to the exporter's board. In addition, the agency found that Guiyang Industry is the "only shareholder that can individually convene an interim shareholder meeting" since it's the only one with more than 10% of shares. The agency added that it expects "any large shareholder, including a government entity, to control the operations of the company in which it holds the largest number of shares, if its shareholder rights afford it that ability."