ANDAMAN SEAFOOD CO., LTD., et al., Plaintiffs, – v – UNITED STATES, Defendant.
Court No. 09-00091
UNITED STATES COURT OF INTERNATIONAL TRADE
February 2, 2010
Slip Op. 10-12
Pogue, Judge
OPINION
[Plaintiffs’ motion for judgment on agency record denied; Commerce’s final Section 129 determination affirmed]
Dated: February 2, 2010
Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (L. Misha Preheim), and, of counsel, Jonathan Zielinski, Office of Chief Counsel for Import
Pogue, Judge: This action raises the question of whether the government may choose to give only prospective effect to its decision to bring its administration of domestic antidumping law into compliance with international commitments. Plaintiffs are producers/exporters of frozen warmwater shrimp from Thailand. Plaintiffs seek review of the Department of Commerce’s (“Commerce” or “the Department”) response to the findings of a World Trade Organization (“WTO”) panel regarding the antidumping duty investigation of certain frozen warmwater shrimp from Thailand.1 Specifically, Plaintiffs challenge Commerce’s partial, rather than total, revocation of the antidumping order at issue, and the Department’s decision to apply only prospectively the revised antidumping margin contained in the
The court has jurisdiction over this case pursuant to
BACKGROUND
This action stems from Commerce’s 2005 antidumping duty order covering certain
In its Final Determination & Order, Commerce calculated Plaintiffs’ dumping margins by using a “zeroing” methodology.5 The Department’s use of this methodology was challenged at the WTO, and, in response to this challenge, a WTO dispute settlement panel concluded that the United States – by employing zeroing to calculate dumping margins in the Final Determination & Order – acted inconsistently with Article 2.4.2 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (“WTO Antidumping Agreement”). The WTO panel recommended that the United States bring its dumping determination into conformity with its obligations under the relevant WTO agreements. Panel Report, United States – Measures Relating to Shrimp from Thailand, ¶¶ 2.2, 8.2, 8.6, WT/DS343/R (Feb. 29, 2008) (“U.S. – Shrimp (Thailand) Panel Report”). (See also Compl. ¶ 7.)
The United States did not appeal the panel’s conclusion in this respect,6 and the panel’s report was adopted by the WTO Dispute Settlement Body (“DSB”) on August 1, 2008. Action by Dispute Settlement Body, United States – Measures Relating to Shrimp from Thailand, WT/DS343/14 (Aug. 7, 2008). (See also Compl. ¶ 7.)7
Following the DSB decision, the government entered into the statutory process to determine whether and how to respond. See
Continuing the statutory process, “the [United States Trade Representative (“USTR”)] held consultations with the Department and the appropriate congressional committees with respect to this determination [as required by section 129(b)(3) of the URAA],” id. at 5,638, and, on January 16, 2009, “in accordance with sections 129(b)(4) and 129(c)(1)(B) of the URAA, the USTR directed the Department to implement in whole this determination.” Id. See also
Accordingly, on January 30, 2009, Commerce issued notice of its determination under Section 129, stating that the Department will apply the recalculated weighted-average dumping margins from the antidumping investigation of frozen warmwater shrimp from Thailand to subject merchandise entered or withdrawn from warehouse for consumption on or after January 16, 2009, the effective date of the determination. Final § 129 Determination at 5,639; see
The re-calculated margins for Plaintiffs were de minimis, Final § 129 Determination, 74 Fed. Reg. at 5,639; see
Plaintiffs now challenge the Final § 129 Determination, arguing that, first, the United States retains no legal authority to assess antidumping duties on Plaintiffs’ prior unliquidated entries (i.e., unliquidated entries made prior to January 16, 2009 – the effective date of the Section 129
Plaintiffs rely on Laclede Steel Co. v. United States, 20 CIT 712, 928 F. Supp. 1182 (1996); Jilin Henghe Pharm. Co. v. United States, 28 CIT 969, 342 F. Supp. 2d 1301 (2004), vacated as moot, 123 F. App’x 402 (Fed. Cir. 2005); and Tembec, Inc. v. United States, 30 CIT 1519, 461 F. Supp. 2d 1355 (2006), judgment vacated, 31 CIT 241, 475 F. Supp. 2d 1393 (2007) (hereinafter collectively referred to as the “Laclede line” of cases), for the proposition that “[o]nce Commerce’s final antidumping determination has been invalidated, it cannot serve as a legal basis for the imposition of antidumping duties.” (Id. at 12 (quoting Jilin, 28 CIT at 978, 342 F. Supp. 2d at 1309-10); see generally id. at 11-14.)
Second, Plaintiffs argue that Commerce’s decision not to apply the Section 129 recalculation and partial revocation of the dumping order to those of Plaintiffs’ unliquidated entries that were entered prior to the Section 129 determination is not consistent with the United States’s international obligations under the WTO agreements, and therefore contrary to law, pursuant to Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch.) 64, 118 (1804) (“[A]n act of Congress ought never to be construed to violate the law of nations if any other possible construction remains . . . .”). (Compl. ¶ 16.)
Plaintiffs rely on two other WTO Appellate Body Reports, United States – Measures Relating to Zeroing and Sunset Reviews, Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW (Aug. 18, 2009), and United States – Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), Recourse to Article 21.5 of the DSU by the European Communities, WT/DS294/AB/RW (May 14, 2009) (Pls.’ Mem. 16-18) for the proposition that “the WTO Agreements establish that prospective compliance means applying a measure that is WTO-consistent after the compliance period ends – irrespective of when the entries occurred.” (Id. at 17-18.) Invoking Allegheny Ludlum Corp. v. United States, 29 CIT 157, 173, 358 F. Supp. 2d 1334, 1348 (2005) (“[Where] Congress has not statutorily created an unavoidable conflict with the WTO, there exists no reason not to look to the WTO for assistance in interpreting U.S. law” (citations omitted)) (relying on Charming Betsy, 6 U.S. (2 Crach) at 118; Fed. Mogul Corp. v. United States, 63 F.3d 1572, 1582 (Fed. Cir. 1995)), Plaintiffs argue that, consistent with the cited Appellate Body reports, Section 129 should be interpreted to apply to all entries of subject merchandise which remain unliquidated at the time that the Final § 129 Determination is implemented. (See Pls.’ Mem. 16-19.)
As explained below, the court rejects both of Plaintiffs’ arguments.
STANDARD OF REVIEW
In an action brought, as here, under Section 516A of the Tariff Act of 1930, the court shall “hold unlawful any [agency] determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in
DISCUSSION
1. The Section 129 Determination Did Not Invalidate the Antidumping Order.
The Laclede line of cases stand for the established principle that an invalid antidumping determination cannot serve as a legal basis for the imposition of antidumping duties. Thus, under the Laclede line, once an agency determination is ruled to have been invalid, all affected unliquidated entries must be liquidated in accordance with that ruling, regardless of their date of entry.
Nevertheless, Plaintiffs cannot successfully invoke the Laclede line’s principle here, because the underlying antidumping order in this case has not been invalidated. Rather, on its face, the Final § 129 Determination is a “partial” and prospective revocation of the underlying order. As a matter of law, the statutory provisions under which the Final § 129 Determination is issued explicitly provides for such a determination. By the statute’s plain terms, a determination implemented pursuant to Section 129 “shall apply with respect to unliquidated entries of the subject merchandise . . . that are entered, or withdrawn from warehouse, for consumption on or after . . . the date on which the Trade Representative directs [Commerce] . . . to implement that determination.”
Moreover, the statute’s plain language is buttressed by the Statement of Administrative Action:
Consistent with the principle that GATT panel recommendations apply only prospectively, subsection 129(c)(1) provides that where determinations by . . . Commerce are implemented under subsection[] . . . (b), such determinations have prospective effect only. That is, they apply to unliquidated entries of merchandise entered, or withdrawn from warehouse, for consumption on or after the date on which the Trade Representative directs implementation. Thus, relief available under subsection 129(c)(1)
is distinguishable from relief available in an action brought before a court or a NAFTA binational panel, where, depending on the circumstances of the case, retroactive relief may be available. Under 129(c)(1), if implementation of a WTO report should result in the revocation of an antidumping [] duty order, entries made prior to the date of [the] Trade Representative’s direction would remain subject to potential duty liability.
Statement of Administrative Action to the Uruguay Round Agreements Act, H.R. Rep. No. 103-316, at 1026 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4313 (“URAA SAA”) (emphasis added).
It is clear, therefore, that Commerce’s determination under Section 129 – in response to a DSB decision that the agency’s action is not consistent with the WTO Antidumping Agreement – has a very different effect than a decision of a U.S. Court or a North American Free Trade Agreement (“NAFTA”) Panel9 that such an action was from the beginning inconsistent with U.S. antidumping law. The plain language of the statute provides that Commerce is to apply a determination under Section 129 prospectively, i.e., to entries made on or after the date on which the USTR directs its implementation. There is nothing on the face of the law to suggest that its effect is to invalidate the original determination in so far as that original determination applies to entries not explicitly covered by the terms of Section 129. To the contrary, the Department’s use of zeroing in arriving at an affirmative LTFV determination – the basis of the challenge and consequent adverse decision in the WTO – has been consistently upheld by U.S. courts as a matter of U.S. law.10
Unlike the case at bar, in each of the Laclede line of cases, the relevant agency
Here, on the other hand, the successful challenge to Commerce’s initial antidumping order was made at the level of the WTO DSB, which concluded, on the basis of the WTO Antidumping Agreement, that regardless of its validity as a matter of U.S. antidumping law, this determination had been made contrary to international agreement. See U.S. – Shrimp (Thailand) Panel Report at ¶¶ 2.2, 8.2, 8.6. The question before the court, therefore, is whether the effect of a determination made pursuant to Section 129 – the statute used to implement the response of the United States, as a matter of domestic law, to the DSB’s recommendations in U.S. – Shrimp (Thailand) Panel Report – is the same as a holding by a U.S. court that the initial challenged determination was issued in a manner that was contrary to law.
The court concludes that it is not.
A Section 129 proceeding responds, inter alia, to a WTO DSB decision that a particular agency determination is not consistent with the United States’ obligations as a Member of the WTO Antidumping Agreement. See
Unlike litigation before the court or a NAFTA panel, WTO Members are not required automatically to comply with the recommendations of a WTO panel or the [Appellate Body]. While compliance is encouraged, the DSU contemplates three different responses to an adverse WTO panel report. A Member may elect to bring its domestic practices in
line with the WTO’s recommendations. Alternatively, Members may substitute a compensatory trade agreement that lowers other barriers to trade while leaving an objectionable practice in place. Finally, a Member may choose not to comply with the WTO’s recommendation.
Tembec, 30 CIT at 984-85, 441 F. Supp. 2d at 1328 (citing URAA SAA at 1008-0914). Accordingly, “Congress fashioned section 129 to allow the United States to take full advantage of its remedial options before the WTO.” Id. (footnote omitted).
In this case, Commerce, the USTR, and the pertinent Congressional committees deemed a prospective partial revocation and recalculation of dumping margins under Section 129 to be the appropriate response to the WTO panel decision in U.S. – Shrimp (Thailand). See Final § 129 Determination. Consequently, in this case, the Department’s recalculations pursuant to Section 129, which resulted in de minimis rates for Plaintiffs, are permissibly applicable solely to entries made on or after the date on which the USTR directed implementation of the Section 129 determination.
Because the recalculation on which the partial revocation is based applies to entries made on or after its date of implementation, “[c]onsistent with the principle that GATT panel recommendations apply only prospectively,” URAA SAA at 1026, and because the Department’s initial calculations, leading to a determination of sales at LTFV using a zeroing methodology, have not been invalidated as a matter of U.S. law,16 the LTFV determination and any antidumping duties assessed on its basis remain in effect with respect to entries not covered by the Section 129 recalculation – that is, with respect to all entries of subject merchandise made prior to the date of implementation of that determination. Accord Corus Staal, 593 F. Supp. 2d at 1386 (noting that Commerce’s use of zeroing to calculate dumping margins is not unlawful as a matter of U.S. law, and concluding accordingly that “Commerce did not err when it instructed Customs to impose antidumping duties on Corus’s entries of [the subject merchandise] given the valid determination of dumping and assumption of injury
Plaintiffs therefore improperly rely on Laclede, Jilin, and Tembec. Because the Department’s original LTFV determination with respect to certain frozen warmwater shrimp from Thailand has not been held to have been invalidly made as a matter of U.S. law, its use as a basis for the assessment of duties on entries made prior to the effective date of the order’s revocation is not contrary to the statute. See
2. Application of the Charming Betsy Principle Does Not Alter the Effect of Section 129.
Plaintiffs also argue that Section 129 should be interpreted so as to be consistent with WTO Appellate Body decisions, pursuant to the principle expressed by the Supreme Court in Charming Betsy, 6 U.S. (2 Cranch.) at 118 (“[A]n act of Congress ought never to be construed to violate the law of nations if any other possible construction remains . . . .”); see also Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347, 1360 n.21 (Fed. Cir. 2006) (“The rule of interpretation announced in [Charming Betsy] instructs that domestic law should be interpreted consistently with American international obligations to the degree possible.”). Plaintiffs claim that WTO decisions require that, once the reasonable implementation period agreed upon by parties to a WTO dispute has expired (in this case, on April 1, 2009), any remaining unliquidated entries of subject merchandise must, in accordance with the DSU, be liquidated in a manner not inconsistent with the recommendations of the DSB.17
As already noted however, the clear intent of Congress in adopting Section 129 of the URAA was “to allow the United States to take full advantage of its remedial options before the WTO.” Tembec, 30 CIT at 985, 441 F. Supp. 2d at 1328 (citing URAA SAA at 1008-09;
In this case, applying the Plaintiffs’ interpretation of WTO precedent to compel Commerce to retroactively apply its partial revocation of the antidumping order to
CONCLUSION
For all of the foregoing reasons, Plaintiffs’ Motion for Judgment on the Agency Record is DENIED. Judgment will be entered for Defendant.
It is SO ORDERED.
/s/ Donald C. Pogue
Donald C. Pogue, Judge
Dated: February 2, 2010
New York, N.Y.