Advanced Tech. & Materials Co., Ltd. v. United States

Slip Op. 13 - 129

UNITED STATES COURT OF INTERNATIONAL TRADE

:

ADVANCED TECHNOLOGY & MATERIALS :

CO., LTD., BEIJING GANG YAN DIAMOND :

PRODUCTS COMPANY, and GANG YAN :

DIAMOND PRODUCTS, INC., :

:

Plaintiffs, : Before: R. Kenton Musgrave, Senior Judge

: Consol. Court No. 09-00511

BOSUN TOOLS GROUP CO. LTD, :

:

Plaintiff-Intervenor, :

:

v. :

:

UNITED STATES, :

:

Defendant, :

:

and :

:

DIAMOND SAWBLADES MANUFACTURERS :

COALITION, WEIHAI XIANGGUANG :

MECHANICAL INDUSTRIAL CO., LTD., :

and QINGDAO SHINHAN DIAMOND :

INDUSTRIAL. CO., LTD., :

:

Defendant-Intervenors. :

:

OPINION

[Sustaining second remand results of antidumping duty investigation of diamond sawblades and

parts thereof from the People’s Republic of China.]

Decided: October 11, 2013

Jeffrey S. Neeley, Michael S. Holton and Stephen W. Brophy, Barnes, Richardson & Colburn,

of Washington DC, for the plaintiffs.

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.

Department of Justice, of Washington DC, for the defendant. With her on the brief were Stuart F.

Consol. Court No. 09-00511 Page 2

Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr.,

Assistant Director. Of Counsel on the brief was Nathaniel J. Halvorson, Office of the Chief Counsel

for Import Administration, U.S. Department of Commerce.

Daniel B. Pickard and Maureen E. Thorson, Wiley Rein, LLP, of Washington DC, for

defendant-intervenor Diamond Sawblades Manufacturers Coalition.

Musgrave, Senior Judge: Before the court are the second results of remand (“Second

Remand Redetermination” or “RR2”) from the U.S. Department of Commerce, International Trade

Administration (“Commerce” or “Department”) on the investigation into sales from the People’s

Republic of China (“PRC”) of diamond sawblades and parts thereof at less than fair value (“LTFV”).

See Slip Op. 12-147 (Sep. 30, 2012).1 The Second Remand Redetermination indicates it is

conducted “under protest”2 in determining the AT&M entity3 ineligible for an antidumping duty rate

separate from the PRC-wide rate after Commerce found AT&M did not choose its own management

autonomously from the PRC state. RR2 at 20. This redetermination mooted the only other issue

remanded for further explanation or reconsideration, i.e, surrogate valuation of 30CrMo steel inputs.

1

36 CIT ___, 885 F. Supp. 2d 1343. See also Diamond Sawblades and Parts Thereof From

the People’s Republic of China, 71 Fed. Reg. 29303 (May 22, 2006) (final LTFV determination)

(“Final Determination”), as amended, 71 Fed. Reg. 35864 (June 22, 2006). The period of

investigation (“POI”) is October 1, 2004, through March 31, 2005.

2

See, e.g., Second Remand Redetermination at 3, n.8, referencing Viraj Group, Ltd. v.

United States, 343 F.3d 1371 (Fed. Cir. 2003). Unlike Viraj Group, however, and as further

discussed below, this matter does not involve “a contrary position forced upon it by the court.” See

343 F.3d at 1376; see also DSMC’s Comments on Second Remand Redetermination at 17-19.

3

The original respondent was Beijing Gang Yan Diamond Products Company (“BGY”).

During the course of the underlying investigation Commerce learned that BGY was affiliated with

AT&M, which in turn was part owner of Yichang HXF Circular Saw Industrial Co., Ltd. (“HXF”),

another exporter of diamond sawblades. See BGY’s Supp. Section A QR, dated September 20,

2005. Finding all three companies to be affiliated, Commerce collapsed them to a single “AT&M

entity.” See Memorandum to the File dated Dec. 20, 2005, PDoc 481 (“Collapsing Memorandum”).

Consol. Court No. 09-00511 Page 3

The defendant and the petitioners-plaintiff, Diamond Sawblades Manufacturers

Coalition (“DSMC”) argue for sustaining those results, while the three respondents comprising the

collapsed “AT&M entity,” Advanced Technology & Materials, Co., Ltd. (“AT&M”), BGY, and

Gang Yan Diamond Products, Inc., argue for further remand. The Second Remand Redetermination

complies with the order of remand and will therefore be sustained.

I. Background

Immediate background is here provided, and familiarity with prior proceedings is

presumed. The court previously examined the analysis, statements and conclusions of the First

Remand Redetermination in the context of the available information of record and remanded, inter

alia, the separate rate redetermination for the AT&M entity. Holding that the redetermination could

not be sustained on the bases articulated by Commerce, it appeared to the court that important

aspects of the problem had not been considered, and explanations counter to the evidence of record

had been offered. See generally 885 F. Supp. 2d 1343. Those concerns may be reduced to the

following: (1) Commerce’s interpretation of “autonomy” in the selection-of-management prong of

the separate rates test and its regard of the “ownership” of separate rate applicants for that purpose;

(2) Commerce’s analysis of the three PRC laws and regulations of record; (3) the factual bases for

Commerce’s analysis of the AT&M entity; and (4) Commerce’s articulation of the separate rate test

generally, the relationship between de jure and de facto analyses, and specific questions arising

therefrom as identified in the court’s order. Remanding these concerns for reconsideration and

clarification, the court concluded as follows:

As to what that implies for purposes of remand, no opinion is here expressed, except

that the court emphasizes it is not here substituting judgment for that of Commerce

Consol. Court No. 09-00511 Page 4

on these issues or insisting upon application of the separate rates test in a certain

way in contravention of Arkansas v. Oklahoma, 503 U.S. 91, 113 (1992). The court

simply seeks to discern the reasonableness of a determination, and the wisdom to do

so. If necessary, upon remand Commerce may re-open the administrative record to

gather additional information.

885 F. Supp. 2d at 1363 (italics added).

II. Second Remand Redetermination

In the Second Remand Redetermination, Commerce’s de facto analysis concluded

that the AT&M entity did not rebut the presumption of state control and is therefore not eligible for

a separate rate. See, e.g., RR2 at 3, n.8 & 13. Commerce first explained that “CISRI held a majority

share in AT&M at the outset of the period of investigation” and “given that CISRI was

wholly-owned by SASAC, government control had the potential to pass from SASAC through to the

AT&M Entity via CISRI” and thus “the question then must necessarily turn to whether this potential

is exercised here.” Id. at 8. Commerce then explained that “CISRI placed four of its senior officials

. . . on AT&M’s board”, that “these four board members were active in the selection of AT&M’s

management”, and that of “the five AT&M board members that were not CISRI officials, all were

nonetheless nominated by CISRI.” Id. at 8-9. Commerce addressed the additional evidence

regarding AT&M’s and BGY’s management, see id., and concluded that “record evidence

demonstrates that AT&M did not choose its own management autonomously.” Id. Thus, Commerce

determined that the “AT&M Entity is part of the [PRC]-wide entity and does not qualify for a

separate rate.” Id. The result of this determination mooted further consideration of the other issue

on remand, the surrogate valuation of 30CrMo steel inputs.

Consol. Court No. 09-00511 Page 5

III. Discussion

A. Separate Rate Analysis

As prelude, neither DSMC nor AT&M urges further remand based upon Commerce’s

de jure analysis or its decision that the valuation of steel inputs is moot. Further, Commerce did not

make any de facto findings as to two of the four prongs, namely, whether the export prices are set

by or subject to approval by a Chinese government agency or whether AT&M has authority to

negotiate and sign contracts. See generally Remand Redetermination. As to the prong analyzing

whether AT&M retains the proceeds of its export sales and makes independent decisions regarding

disposition of profits or financing of losses, Commerce determined that “[t]he record holds little

evidence as to how interrelated finances between AT&M and CISRI influenced export functions.”

Id. at 21. No party contests this finding; the only issue before the court is Commerce’s finding on

the remaining prong of the de facto analysis that AT&M did not demonstrate autonomy from the

PRC government in its selection of management.

As further prelude, there are several interpretive nits to which the Second Remand

Redetermination’s analysis draws attention, which are aside from its findings. For example, in

addition to note 2, supra, Commerce files disagreement with the “rejection” of its First Remand

Redetermination “regarding the full effects of the SASAC Interim Regulations (and the weight it

should be given) in the broader de jure and de facto analysis, especially with respect to control over

export activities, that comprises the Department’s separate rate test and the impact of ownership

here, and are conducting the remand under protest.” RR2 at 20 n.47; see infra. The court only stated

that the First Remand Redetermination could not be sustained as articulated; it expressed no opinion

Consol. Court No. 09-00511 Page 6

whatsoever on the “weight” the Interim Regulations should be given in the broader de jure and de

facto analysis. With respect to “control over export activities,” the opinion merely drew attention

to those provisions that facially appeared to have some bearing on that analysis in order to elicit from

Commerce further clarification and/or re-analysis on remand. On remand, Commerce was entirely

free to explain any analytical error in the opinion or clarify its own earlier analyses in order to aid

the court’s understanding.

In addition, under a section entitled “Court’s Analysis of Ownership” [sic] the Second

Remand Redetermination states that the court “began its analysis by observing that CISRI’s[ ]

ownership of AT&M should be considered relevant despite the Department’s long-standing practice

of finding that corporate form may insulate a company from government control.[ ]” RR2 at 3

(italics added, footnotes omitted). That does not quite restate the First Remand Determination’s

actual statement of that practice; the First Remand Determination stated, in essence, that corporate

form, per se, entirely insulates a company from government control, whereas the prior opinion only

observed (again) that it is “settled” that government ownership alone is not dispositive of control.

See Slip Op. 11-122 (Oct. 12, 2011) at 14, referencing Qingdao Taifa Group Co., Ltd. v. United

States, 33 CIT 1090, 1100, 637 F. Supp. 2d 1231, 1242 (2009). The opinion then observed that

“corporate form in and of itself has never been found to ‘demonstrate’ insulation from governmental

control [and been found dispositive on the absence of de jure control], or further de jure proof of the

absence thereof in accordance with the separate rate test would serve no purpose.” 885 F. Supp. 2d

at1350. That is simply a point of logic, not analysis of ownership. The Second Remand

Redetermination seems to disclaim the point, but the redetermination also reflects Commerce’s own

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independent findings notwithstanding, i.e., “[i]n response to and consistent with the Court’s analysis

. . . the Department finds that ownership is relevant to the separate rates analysis to the extent that

ownership, as well as the degree of ownership, affects de facto control”. RR2 at 3.

The Second Remand Redetermination also states with regard to the PRC Interim

Regulations that the court “held that the Department incorrectly treated the implementation of the

Interim Regulations as a form-over-substance change in the law” and “failed to recognize that these

regulations were an ‘obvious declaration of re-centralized de jure control’” RR2 at 4 (italics added).

This, too, does not quite restate the case. The quoted observation by the court pertains to Interim

Regulation Article 11, which provides that SASAC’s “invested enterprises shall accept the

supervision and administration conducted by the State-owned assets and administration authority

according to law”, upon which the court merely opined “[t]his seems an obvious declaration of re-

centralized de jure control” (italics added in part). 885 F. Supp. 2d at 1351. But seeming does not

make it so -- that is still for Commerce to decide. See, e.g., RR2 at 17 (“Pursuant to our examination

of the Court’s opinion and remand order, we found that the SASAC law creates the potential for

control, as opposed to definitively establishing either the absence of de jure government control or

complete independence over export activities. Recognizing that the de jure evidence in this case did

not clearly settle the issue of de jure control, we further scrutinized the record evidence to see if it

substantiates an absence of de facto control. . . .”). Consistent with the standard of review on these

administrative determinations, such an observation by the court is properly construed as dicta, not

a “holding” or ratio decidendi. More precisely, the opinion only attempted circumspect examination

of whether the substantial evidence of record supported Commerce’s conclusions on the Interim

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Regulations4 through juxtaposition of them against the undiscussed and seemingly contradictory

evidence of record. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951); see, e.g.,

Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed. Cir. 1994).

Further remand at this point, however, to readdress these and other like points,

appears unlikely to impact the results of remand. The court will therefore proceed. Cf. SKF USA,

Inc. v. United States, 30 CIT 1402, 452 F. Supp. 2d 1335 (2006) (sustaining remand results after

striking misconstrued matters), vacated on other ground, 512 F.3d 1326 (Fed. Cir. 2008).

AT&M strongly disagrees with the Remand Redetermination as contrary to

Commerce’s longstanding practice, as logically unexplained, and as unsupported by the facts of

record. It argues that it is not a producer or exporter of subject merchandise or a respondent in this

case but is a shareholder in companies that produce such merchandise, that Commerce’s approach

has been to determine whether the exporters (BGY for diamond sawblades and HXF for cores),

which are part of the AT&M entity, have independence with regard to their export activities rather

than in some general independence from all governmental influence, and that the fact that Commerce

has collapsed the companies for the purpose of applying one antidumping deposit rate does not mean

that the companies act as one unit in selling subject merchandise or in setting prices but rather

Commerce has made the distinction between the collapsing analysis and the separate rates analysis

“very clear”. AT&M Comments at 2-3, quoting Persulfates From the People’s Republic of China,

4

E.g., Commerce earlier had concluded that“the Interim Regulations do not automatically

demonstrate de jure control of a state-owned enterprise[,]” and that the Interim Regulations “set[ ]

aside particular protections for the autonomy of companies operating under SASAC, showing that

SASAC solely provides oversight and is not intended to direct day-to-day business operations” and

does not “interfere [in] or influence” the latter. First Remand Redetermination at 20-21.

Consol. Court No. 09-00511 Page 9

62 Fed. Reg. 27222 (May 19, 1997) (final determination), issues and decision memorandum at cmt.

2 (“The Department has a longstanding methodology for determining whether companies in a

nonmarket economy are entitled to a separate rate. That methodology is separate and distinct from

the ‘collapsing’ methodology in both focus and function. On the one hand, the separate rates test

focuses specifically on whether there is government control of a nonmarket company's export

activities. On the other hand, the ‘collapsing’ methodology focuses on the relationship between two

or more affiliated companies, not their relationship vis-a-vis the government or other entities. There

is no basis for applying a ‘collapsing’ analysis in this case.”).

The court has previously addressed similar points and perceives no reason for altering

its prior opinion. See, e.g., 885 F. Supp. 2d at 1349 (“There is no dispute that the focus of the

separate rates test here is the AT&M entity’s export operations, that Commerce’s test applies only

to exporters, and that CISRI is not an exporter, but CISRI is still an owner, and even the AT&M

entity agrees consideration of that ownership is relevant.”) & 1362 n.21 (“Whatever their motivation,

both [the collapsing and separate rate] tests obviously overlap on such matters as level(s) of

ownership, the extent to which companies are directed by the same employees or board members,

and interdependency of intertwined operations such as through involvement in production and

pricing decisions or financing, et cetera. Cf. 19 C.F.R. § 351.401(f) with Sparklers From the

People’s Republic of China, 56 Fed. Reg. 20588 (May 6, 1991) (final LTFV determination)] . . . at

20589 (respondent’s argument ‘that there is no evidence of coordination among the companies on

such matters as price setting, market division, and production practices’) (italics added)”).

Next, AT&M takes issue with Commerce’s de facto finding of the absence of

independence, characterizing it as based solely on the corporate structure of the companies, the

Consol. Court No. 09-00511 Page 10

appointment of the officers of the companies, and the voting rights of the companies. AT&M

contends there is no discussion of any facts showing the PRC government being involved in making

export-related investment, pricing and output decisions of any producer of subject merchandise

affiliated with AT&M, or choosing customers in the United States or in any other market, no

discussion of what new standard is being applied, if any, to determine government control or lack

thereof, and no discussion of what degree of influence on such decisions would be necessary for

there to be de facto control, and it identifies two “logical flaws” in the remand redetermination, the

first of which, it argues, is that the redetermination “makes the leap” from “may constitute evidence”

to “record evidence demonstrates that AT&M did not choose its own management autonomously”

and therefore Commerce found “that the AT&M Entity is part of the PRC-wide entity and does not

qualify for a separate rate.’” See AT&M Comments at 4. AT&M argues Commerce’s discussion

does not hang together logically, in that certain facts are said to be of a nature that they “may

constitute evidence” but are not stated to actually constitute evidence. AT&M asks why, if

Commerce had found that the facts “are” evidence rather than being items that “may constitute”

evidence, did Commerce find that they are compelling evidence?

The defendant’s response is telling: “Regardless of its use of the word ‘may,’

Commerce explicitly found that . . . CISRI (a 100-percent state-owned entity) was ‘active in the

selection of AT&M’s management.’” Def’s Resp. at 7, quoting RR2 at 9. The point is that “because

AT&M had not shown autonomy in choosing its own management, Commerce found that AT&M

had failed to rebut the presumption of state control.” Id., referencing id.

Next, AT&M contends there is no discussion of why Commerce made the

counterfactual finding that CISRI is the equivalent of the PRC government. “If the Department

Consol. Court No. 09-00511 Page 11

actually is making a determination that entities such as CISRI are the equivalent of the [PRC]

government, then it must offer evidence from the record in support of its conclusion” and explain

why the “shareholder of the shareholder of the exporter” can be said to be influencing exports within

the meaning of the separate rates test. AT&M Comments at 4.

This argument, however, seems to invert the burden of proof on the presumption. The

defendant’s response is again telling:

. . . AT&M does not actually take issue with the four prongs making up Commerce’s

separate rates test. See generally AT&M Comments. To the extent AT&M claims

that Commerce did not sufficiently address or analyze the three other prongs, as

Commerce explained: “the appointment of company officers and senior managers

directly relates to one of the explicit de facto criteria and each of the de facto prongs

must be satisfied for a company to get a separate rate.” [Second] Remand

Redetermination at 20 (emphasis added). Commerce determined that -- in the

context of this Court’s previous determinations -- the AT&M entity did not satisfy

the management prong with respect to independence from the government, and ended

its analysis there. See id. at 13.

Def’s Resp. at 6 (italics in original).

AT&M next calls attention to the Second Remand Redetermination’s statement that

“[i]n both [de jure and de facto] analyses, the central question is whether the control is applied (and

not just potential), regardless of the mechanism.” RR2 at 14. AT&M posits that “[t]his is precisely

correct and summarizes the approach of the Department for many years.” AT&M Comments at 5.

AT&M then argues “the discussion . . . with regard to CISRI and AT&M makes no logical sense in

light of those announced standards of applied control.” However, the court finds the discussion to

be based on a lack of evidence of record to rebut the presumption of government control, which is

in accordance with the purported separate rate test, and therefore logical. See Import Administration

Policy Bulletin 05.1 (Apr. 5, 2005).

Consol. Court No. 09-00511 Page 12

AT&M further argues that Commerce failed to explain whether the Second Remand

Redetermination constitutes a new practice or the application of Commerce’s past practice. AT&M

Comments at 5-7. It contends that if Commerce cannot explain its policy, then it must abandon it

and not apply separate rates here or in other cases. AT&M complains that CISRI is not the company

being reviewed for export pricing, BGY is, and that “there is simply no evidence of record, even if

CISRI is government controlled, that CISRI is setting prices or otherwise affecting exports for a

company two levels down. Indeed, Petitioner does not even attempt to make this argument.” Id. at

5-6. More broadly:

The argument with regard to management also fails because it does not link

the selection of management to the [PRC] government, but at most, to a company

that Petitioner says is owned by the [PRC] government. Petitioner argues that CISRI

selects all management. The Department then stated: “Thus, record evidence

demonstrates that AT&M did not choose its own management autonomously.

Therefore, we find that the AT&M Entity is part of the PRC-wide entity and does not

qualify for a separate rate.”

What does it mean that the company “does not choose its management

autonomously”? Neither does General Motors or Apple. All shareholder companies

such as GM or Apple or AT&M have their management chosen by a board of

directors which are elected by the shareholders. In fact, GM has U.S. government

ownership. If the Department is stating that if shareholders who are government-

owned choose management, then the government per se is setting its export prices

and policies, then it must explain how it arrives at this conclusion. It also should

explain in detail what facts on the record or what policy leads to this conclusion. If

not, and if it is continuing its traditional approach where it looks for factual proof of

actual influence on prices, then it should say that.

Even if it is true that CISRI is choosing top management of the publicly

traded company, AT&M, how does this translate two levels down to setting the

selling prices for diamond sawblades by BGY to the United States or otherwise

influencing exports? How does the Department think this mechanism works? By

Petitioner’s own argument, CISRI is not the Chinese government, but rather a

state-owned company. Thus, even under the Petitioner’s theory of the case, a

Consol. Court No. 09-00511 Page 13

shareholder of AT&M is influencing decisions about who is to be the management

of the company, not the Chinese government.

Id. at 6-7.

The defendant response is again telling: “AT&M overlooks that Commerce addressed

this issue in the [Second] Remand Redetermination, and explained that it was not replacing its prior

practice but was altering its analysis under protest given this Court’s prior remand orders. See

[Second] Remand Redetermination at 20, n.47 (‘we respectfully disagree with the Court . . . and are

conducting the remand under protest. In the First Remand Redetermination, we provided a detailed

analysis of how our original decision in the Final Determination was correct and supported by record

evidence, and we maintain that those determinations were appropriate.’).” Def’s Resp. at 7 (italics

removed in part). Notwithstanding such disclaimer, however, the court fails to discern any “altering”

in the Second Remand Redetermination of the separate rate test, as opposed to a straightforward

application of it, as the test purports, based on the administrative record, and as requested. See

Import Administration Policy Bulletin 05.1 (“whether the respondent has autonomy from the central,

provincial and local governments in making decisions regarding the selection of its management”).

The court can agree with AT&M that Commerce has not been more forthcoming in offering a fuller

explanation its test and policy, but calling for paying proper attention to the process by which

corporate management is chosen is rather the point this aspect of the DSMC’s claims, and the

analogy to direct U.S. government involvement in U.S. corporations does not persuade that

Commerce’s presumption of state control in NME economies, and its burdening of respondents with

demonstrating the absence of such control, can be concluded unreasonable, at least on the basis of

that factually distinguishable analogy.

Consol. Court No. 09-00511 Page 14

AT&M lastly argues on the separate rate issue that Commerce’s determination is

based upon a mistranslation regarding minority shareholder voting rights. AT&M Comments at 7-8

(arguing that PRC law does not preclude minority shareholders from forming a voting block to

out-vote CISRI). The court’s previous opinion took the record of PRC law5 into account, see also,

e.g., 885 F. Supp. 2d at 1357-58 & n.15, and Commerce addressed the issue in the Second Remand

Redetermination by explaining that even if the law permitted such a voting block, no such voting

block formed or took action during the period of investigation in any event. See RR2 at 21 (“As to

the AT&M Entity’s argument about the 10-percent ownership threshold for nominating directors,

the record contains no evidence of any such group of shareholders joining to nominate a board

candidate.”). As such, any alleged mistranslation would be moot.

B. Whether the PRC-Wide Rate Is An “Adverse” Rate

AT&M argues that Commerce as a matter of law cannot apply an “adverse rate” to

the AT&M entity by assigning it the PRC-wide rate -- a rate based on adverse facts available --

because the AT&M entity cooperated with Commerce’s investigation. See AT&M Comments at

8-10. But Commerce did not apply adverse facts available to AT&M, Commerce rather found that

AT&M had not rebutted the presumption of state control and assigned it the PRC-wide rate. “These

are two distinct legal concepts: a separate AFA rate applies to a respondent who has received a

separate rate but has otherwise failed to cooperate fully whereas the PRC-wide rate applies to a

5

On this, AT&M also contends Chapter 3, Article 49, of the Code of Corporate Governance

for Listed Companies in the PRC requires the appointment of independent directors, Article 50

requires the independent directors to protect the interest of minority shareholders, and “[h]ad CISRI

been able to nominate all of the directors, this provision of law would have been violated.” The

conclusion does not appear valid, however, since nomination and appointment are distinct.

Consol. Court No. 09-00511 Page 15

respondent who has not received a separate rate.” Watanabe Group v. United States, 34 CIT ___,

___, Slip Op. 10-139 at 9 n.8 (2010), citing Since Hardware (Guangzhou) Co. v. United States, 34

CIT ___, Slip Op. 10-108 at 23 (Sep. 27, 2010)). To the extent AT&M suggests that Commerce may

never apply adverse facts available (or, for that matter, facts available) in calculating a PRC-wide

rate, its references do not support the proposition.

AT&M also alleges that because it was not found to be separate from the PRC

government and because it cooperated in the proceedings, the PRC-wide entity should be considered

cooperative and, therefore, application of the adverse-facts-calculated PRC-wide rate was in error.

See AT&M Comments at 10-11. The defendant argues AT&M’s argument does not take into

account that 13 other PRC-wide companies failed to cooperate, Def.’s Resp. at 9, quoting RR2 at 22,

but the rejoinder is inadequate; rather, “Commerce’s permissible determination that [a respondent]

is part of the PRC-wide entity means that inquiring into [that respondent]’s separate sales behavior

ceases to be meaningful.” Watanabe, Slip Op. 10-139 at 8. “[A]s losing all entitlement to an

individualized inquiry appears to be a necessary consequence of the way in which Commerce applies

the presumption of government control, . . . applying a countrywide AFA rate without individualized

findings of failure to cooperate is no different from applying such a countrywide AFA rate without

individualized corroboration.” Jiangsu Changbao Steel Tube Co., Ltd. v. United States, 36 CIT ___,

___, 884 F. Supp. 2d 1295, 1312 n.21 (2012), referencing Watanabe, Slip Op. 10-139 at 8. For that

reason, this court is unable to find Commerce’s application of the PRC-wide rate to the AT&M

entity on remand improper.

Consol. Court No. 09-00511 Page 16

C. Presumption of State Control and Countervailing Duties

Finally, AT&M makes a sweeping objection to the presumption of control applied

to NME countries, arguing that Commerce should have eliminated its separate rates practice

altogether in light of its application of countervailing duties to the PRC. It may be worth setting

forth the full argument at length, for future reference:

The presumptions underlying the separate rates approach are no longer valid.

Indeed, the presumption is backwards, as is apparent from the Department’s own

words and practice -- the only presumption that is supportable is the presumption that

[PRC] companies are not controlled by the [PRC] government [. . .] but that

presumption can be overcome by facts on the record.

The Department’s presumption that “all firms within a non-market economy

country (“NME”) are subject to government control and thus should all be assigned

a single, countrywide rate unless a respondent can demonstrate an absence of both

de jure and de facto control over its export activities,” is contradicted by the

Department’s decision to change its practice concerning the application of the

countervailing duty law. In particular, the Department found that the “current nature

of [PRC]’s economy does not” give rise to the same issues that were litigated in

Georgetown Steel, mainly of which were “Soviet-style economies” that were

essentially comprised of a single central authority or central control that would result

in presumption of state ownership. See Memorandum [. . .], re: Countervailing Duty

Investigation of Coated Free Sheet Paper from the People’s Republic of China -

Whether the Analytical Elements of the Georgetown Steel Opinion are Applicable to

China’s Present-Day Economy, dated March 29, 2007, at 4 [. . ..]

A major basis for the Department’s conclusions and change in its practice

concerning the application of CVD laws was a factual finding “that market forces

now determine the prices of more than 90 percent of products traded in China.” [Id.]

at 5. Similarly, the Department found that the China’s “current Labor Law grants the

right to set more wages above the government-set minimum wage to all enterprise’s,

including foreign invested enterprises (“FIE”), SOEs and domestic private

enterprises.” [Id. . . .]

These clear findings contradict the [Department]’s presumption in the

antidumping separate rates practice that “all firms within a non-market economy

country are subject to government control and thus should all be assigned a single,

country-wide rate unless a respondent can demonstrate an absence of both de jure

Consol. Court No. 09-00511 Page 17

and de facto control over its export activities.” At a minimum, the Department’s

decision to enforce the CVD laws based on the above conclusions clearly indicates

that at least with de jure control, interference by the government in a companies’

exports activities can no longer simply be presumed, since the 1994 Company Law

(as amended in 2006) requires that all companies make all export decisions

independent from Chinese governmental control. Moreover, the Department has

consistently found an absence of de jure control when a company has supplied

business licenses and export licenses, each of which have been found to demonstrate

an absence of restrictive stipulations and decentralization of control of the company

based on the Company Law [. . ..]

Furthermore, the Department’s finding “that market forces now determine the

prices of more than 90 percent of products traded in China,” reverses any de facto

presumption that China’s government controls pricing. The presumption, by the

Department’s own reasoning, must be just the opposite -- the only justified

presumption is one of government non-interference.

The Department specifically has found that “in recent years that many more

companies export activities are independent from the PRC government in

comparison with the early- to mid-1990s.” [Id.] at 10.

The inconsistency between the AD presumption of state control and the

factual findings made by the Department to justify CVD proceedings is obvious. The

Department’s presumption that all firms within a NME are subject to government

control and thus should all be assigned a single, country-wide rate, in the AD

proceedings is just the opposite of the findings that the Department used to justify

bringing CVD cases. A presumption of state control implies that the [PRC] economy

is nothing less “than the traditional communist economic system of the early 1980s,

i.e., the so-called ‘Soviet-style economies’” that were at issue in Georgetown Steel,

which the Department clearly now rejects based on its application of CVD law. See,

e.g., [id.] at 4.

Based on the above, the Department should not have applied the presumption

of state control in this review but instead should be consistent with its findings used

to justify bringing CVD cases and presume that no such state control exists unless

record evidence shows otherwise.

AT&M Comments at 12-15 (citations omitted in part, bracketed editing added).

The court expresses no opinion at this point on whether AT&M’s arguments are valid,

since, as the defendant points out, this claim appears beyond the scope of the remand. Cf. RR2 at

Consol. Court No. 09-00511 Page 18

22 (observing that “in the underlying investigation, no party challenged our factual finding with

respect to the presumption of state control” over companies that did not provide separate rate

applications and finding “no basis to change the presumption that the PRC is an NME country based

on the record”). For purposes of this matter, at least, the Court of Appeals for the Federal Circuit

has affirmed Commerce’s application of the presumption to the PRC. See Sigma Corp. v. United

States, 117 F.3d 1401, 1405-06 (Fed. Cir. 1997).

IV. Conclusion

For the above reasons, the court will sustain the second results of remand sub nom.

Final Results of Redetermination Pursuant to Remand Order[:] Diamond Sawblades and Parts

Thereof from the People’s Republic of China, dated May 6, 2013. Judgment will enter accordingly.

/s/ R. Kenton Musgrave

R. Kenton Musgrave, Senior Judge

Dated: October 11, 2013

New York, New York