Commerce Reversed Course After Drafting AD Order, Misled Importers, Plaintiffs Say

All plaintiffs filed a joint reply to the U.S. May 31 in a case regarding the number of Chinese-origin parts required for an entire wheel to be considered of Chinese origin -- rims, discs, or both -- under an antidumping duty order on steel trailer wheels (Asia Wheel v. U.S., CIT Consol. # 23-00096).

In its opposition to the plaintiff’s motion for judgment, the U.S. argued March 8 that the Commerce Department didn’t include language modifying the AD order to specifically say “rims and discs” because it wanted to leave open the opportunity for it to conduct a substantial transformation analysis later (see 2403120058).

But that wasn’t what the department was saying when it drafted the order, said plaintiffs Asia Wheel, Trailstar, Lionshead Speciality Tire and Wheel and Dexter Distribution Group.

They said that at the time of drafting, Commerce confirmed to two importers that the scope language was intended to exclude wheels whose rim or disc came from a country other than China. This was shown in a memo the department sent to the importers, they said.

“Commerce’s response was unequivocal,” they said. “In its final scope determination issued in the AD/CVD investigations, Commerce declined to amend the scope language to incorporate Trans Texas’s and HiSpec’s request, but only because ‘the existing language sufficiently conveys the concept that third-country processing of a steel wheel must be of rims and discs produced in China’ for the imported wheel to fall within scope.”

The order’s language itself covers “rims and discs from China,” they said. Therefore, they said, their wheels made of discs from China and rims from Thailand or elsewhere should not be subject to AD duties.

The plaintiffs also disagreed with the result of the substantial transformation analysis the department conducted on their wheels. They said that Commerce “nonsensically reasoned” that a disc, on its own, exhibited the same essential characteristics as a finished wheel.

They also said Commerce’s analysis failed to consider the “fundamental” question of whether a disc became a new product with a new name, character and use when it was processed into a wheel. The U.S. and a defendant-intervenor argued that that standard is only used by CBP, not Commerce, but “Commerce itself identified the ‘new name, character and use’ test as the underpinning for its ‘substantial transformation test,’” they said.

“Only by ducking the fundamental question was Commerce able to conclude that the Chinese-origin disc was not substantially transformed in Thailand into a finished trailer wheel.” they said.