Parties Discuss Reliability of Evidence During Rebar Case Oral Argument

A Turkish rebar exporter and the government held oral arguments last week over the countervailability of a Turkish subsidy that Court of International Trade Judge Gary Katzmann implied could be considered de jure, but not de facto, specific. They also debated the reliability of a report on land benchmark prices that was prepared specifically for litigation and that included government rates (Kaptan Demir Celik Endustrisi ve Ticaret v. U.S., CIT #23-00131).

The de jure specificity discussion revolved around a Turkish program that exempts the government’s Bank and Insurance Transactions Tax on foreign exchange sales for companies that meet one of five criteria, such as holding an industry registration certificate.

Exporter Kaptan Demir Celik Endustrisi’s attorney, David Simon, said that all Turkish industries must hold an industry registration certificate to manufacture products in Turkey. The registration law “has teeth,” and nobody is exempt from it, he said. Because all industrial companies have registration certificates, the BITT exemption is available to them all, making it not de jure specific, he said.

The government argued that while all Turkish industrial companies are eligible for industry registration certificates, the BITT exemption only applies to those that actually hold a certificate.

DOJ attorney Kelly Geddes argued that there is less evidence than Kaptan claims there is showing that all Turkish manufacturers hold industrial registration certificates. She said the government could treat possession of such certificates the same way many cities treat laws against jaywalking -- rarely enforcing them. And she said it’s unclear how “industries” are defined under Turkish law.

Kaptan itself actually became eligible for the exemption under another one of the criteria, not the industrial registration certificate one, she noted.

“If the record does not contain sufficient evidence to show that the BITT program was generally available, rather than limited to certain companies, [doesn’t that mean] Commerce would be required to demonstrate an express limitation?” Katzmann asked. “Your argument seems to rely on the existence of an implicit functional limitation based on a theory of limited eligibility.”

Geddes said the Turkish law expressly includes eligibility criteria. Kaptan has the burden to prove that “those criteria are so broad as to be essentially meaningless,” she said. Otherwise, she asked, “why wouldn’t [the law] simply say that everybody is exempt from the BITT tax?”

The parties also discussed Commerce's rejection of a report Kaptan commissioned regarding land prices in Turkey. Simon said the agency hadn't read it before rejecting it.

Commerce cited three reasons for rejecting Kaptan’s report as unreliable, Simon said: it had been commissioned for litigation in the trade court, it was entirely confidential, and it contained public land lease prices that couldn’t serve as an adequate benchmark for private Turkish market prices.

First, Simon said, the fact that the report had been commissioned for litigation shouldn’t have been enough for Commerce to deem it entirely inadequate. Rather, the agency should have taken its commission date into account when considering the information in it, as the U.S. Court of Appeals for the Federal Circuit ruled in the 2001 case Sandt Tech. v. Resco Metal & Plastics.

The government, however, took the Sandt case “and converted it to an exclusion rule,” he said.

Simon also said Commerce regularly uses business proprietary information in its analyses, and any claim to the contrary was “disingenuous.” He also said the public land prices had been separated into their own column in Kaptan’s report, so they couldn’t have corrupted the overall data. Commerce didn’t know that “because they didn't even open the report” and instead “just took the petitioner's claim at face value,” he said.

Geddes disagreed, saying Commerce had opened Kaptan’s report and had only rejected it after a holistic analysis of its reliability. She also noted that the issue went “really deep in the territory of Commerce’s discretion,” saying that the court “should not substitute its judgment for the judgment of Commerce.”

Sandt isn’t an exclusionary rule, Geddes said. She said it provides a warning to the government to scrutinize evidence prepared specifically for litigation more closely.

“When evidence is prepared by a private party specifically for the purposes of trying to win an adversarial proceeding, that raises a huge risk of inherent bias,” she said. “And we see this all the time. When parties bring in experts, anyone can find an expert who's going to take their side.”

But the fact that the report was prepared for litigation hadn’t been the only reason it was disqualified, she said. Rather, it was that, plus the two other issues -- the report’s confidentiality and its inclusion of government land prices -- that convinced Commerce not to use it.

Regarding the report’s confidentiality, Geddes said that the department felt the report would be difficult to cite in public-facing documents, and that went against “a preference for transparency in government action.” And though Kaptan claimed its government prices were separated into their own column, “it offers little support for that idea,” she said.