2020 CIT 122
Ct. Intl. Trade2020Background
- Zhejiang Machinery Import & Export Corp. (ZMC) exported tapered roller bearings from the PRC and sought a separate antidumping rate in an administrative review; Commerce presumes NME exporters are government-controlled unless they rebut de jure and de facto control.
- ZMC is 100% owned by Sunny; Sunny’s registered owners included Zhejiang Province Metal & Minerals I/E Co. (ultimately SASAC-controlled) and Sunny's labor union listed as majority shareholder in Sunny's Articles (the labor union was nominally the majority owner; Sunny’s ESOC and individual employee shareholders were asserted by ZMC to be the effective owners).
- ZMC submitted a corrected English translation of the ESOC Articles after Commerce’s preliminary results; Commerce rejected that August submission as untimely new factual information and accepted a revised brief without the corrected translation.
- Commerce’s final determination denied ZMC a separate rate, citing (1) the GOC’s ability to control unions via the ACFTU and (2) the labor union’s nominal majority ownership (and asserted ability to appoint board members), and also relied on a finding that ESOC members are labor-union members.
- ZMC challenged the final results in the CIT, arguing Commerce unlawfully rejected corrective translation, failed to address record evidence showing ESOC/individual shareholders control Sunny, and that Commerce’s reliance on its NME Status Memo re: ACFTU control was unsupported; the court remanded for further explanation and consideration of the corrected translation, and found Commerce abused its discretion in rejecting corrective information.
- The court also held ZMC failed to exhaust administrative remedies for its argument attacking Commerce’s NME Status Memo reliance, but found ZMC exhausted claims that (a) not all ESOC members are union members and (b) individual ESOC members’ capital contributions establish shareholder voting/control rights; Commerce must reconsider these matters on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rejection of August submission (corrected ESOC translation) | Translation was corrective (not new) and submitted well before final results; Commerce abused discretion by excluding it | Re-translation was untimely new factual information and would have required reopening the record and comment period | Court: rejection was an abuse of discretion; the translation was corrective and Commerce must consider it on remand |
| Adequacy of Commerce's reliance on NME Status Memo re: ACFTU control of unions | NME memo’s discussion of ACFTU concerns wage bargaining, not general union control; Commerce’s use of it was flawed | Commerce: NME Status Memo supports that ACFTU (GOC-affiliated) has legal monopoly over trade union activity; ZMC failed to rebut | Court: ZMC failed to exhaust administrative remedies on this specific challenge; court will not reach merits |
| Whether GOC (via ACFTU and labor union) could exercise de facto control over Sunny/ZMC | ZMC: ESOC and individual shareholders actually exercise shareholder rights; the labor union lacks the structure or authority to exercise majority rights | US: even potential control by a GOC-affiliated majority owner suffices; ACFTU/legal structure gives labor unions ability to influence management | Court: Commerce’s finding that ACFTU can influence unions is supported by substantial evidence, but Commerce failed to explain how the labor union could exercise majority shareholder rights in light of ESOC evidence — remand required |
| Whether ESOC members are union members and capital contributions confer voting control | ZMC: record does not support that all ESOC members are union members; individual ESOC members made capital contributions and thus hold voting rights | US: Commerce relied on original translation showing ESOC members were union members; in any event that finding was only "relevant" not dispositive | Court: ZMC exhausted claims on ESOC membership and capital-contribution/voting issues; Commerce’s finding that all ESOC members are union members rests on the rejected translation and must be revisited on remand |
Key Cases Cited
- Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304 (Fed. Cir. 2017) (framework for rebutting NME government-control presumption and relevance of management-selection factor)
- Timken U.S. Corp. v. United States, 434 F.3d 1345 (Fed. Cir. 2006) (agency should permit corrective information submitted before final results to ensure accuracy)
- NTN Bearing Corp. of Am. v. United States, 74 F.3d 1204 (Fed. Cir. 1995) (rejecting new information can be an abuse where accuracy would not be compromised or delayed)
- Goodluck India Ltd. v. United States, 393 F. Supp. 3d 1352 (CIT 2019) (examples where corrective information should have been accepted)
- Fischer S.A. v. United States, 700 F. Supp. 2d 1364 (CIT 2010) (acceptance of corrective data important to accurate margins)
- Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (limits on deference to agency interpretations of their own regulations)
- AMS Assocs., Inc. v. United States, 719 F.3d 1376 (Fed. Cir. 2013) (distinguishing de jure and de facto control inquiries)
- Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (NME separate-rate presumption rationale)