TMK IPSCO v. United States , 222 F. Supp. 3d 1306 ( 2017 )

Slip Op. 17-54
UNITED STATES COURT OF INTERNATIONAL TRADE
TMK IPSCO ET AL.,
Plaintiffs and Consolidated Plaintiffs,
and
MAVERICK TUBE CORPORATION ET AL.,
Plaintiff-Intervenors and Consolidated
Plaintiff-Intervenors,
Before: Claire R. Kelly, Judge
v.
Consol. Court No. 10-00055
UNITED STATES,
Defendant,
and
TIANJIN PIPE (GROUP) CORP. AND TIANJIN
PIPE INTERNATIONAL ECONOMIC &
TRADING CORP.,
Defendant-Intervenors and
Consolidated Defendant-Intervenors.
OPINION
[Sustaining the remand results issued by the U.S. Department of Commerce concerning
its final determination in the countervailing duty investigation of certain oil country tubular
goods from the People’s Republic of China.]
Dated: May 3, 2017
Roger Brian Schagrin, Christopher Todd Cloutier, John Winthrop Bohn, Jordan Charles
Kahn, and Paul Wright Jameson, Schagrin Associates, of Washington, DC, for plaintiffs
and consolidated plaintiff-intervenors TMK IPSCO, V&M Star L.P., Wheatland Tube
Corp., Evraz Rocky Mountain Steel, and United Steelworkers.
Consol. Court No. 10-00055 Page 2
Alan Hayden Price and Robert Edward DeFrancesco, III, Wiley Rein, LLP, of Washington,
DC, for consolidated plaintiff and consolidated plaintiff-intervenor Maverick Tube
Corporation.
Debbie Leilani Shon, Jon David Corey, Jonathan Gordon Cooper, and Kelsey Marie Rule,
Quinn Emanuel Urquhart & Sullivan, LLP, of Washington, DC, for consolidated plaintiff
and consolidated plaintiff-intervenor United States Steel Corporation.
Loren Misha Preheim, Assistant Director, U.S. Department of Justice, Civil Division,
Commercial Litigation Branch, of Washington, DC. for defendant. With him on the brief
were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director,
and Claudia Burke, Assistant Director. Of counsel on the brief was Shelby Mitchell
Anderson, Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade
Enforcement & Compliance, of Washington, DC.
Daniel Lewis Porter, William Henry Barringer, and Matthew Paul McCullough, Curtis
Mallet-Prevost, Colt & Mosle LLP, of Washington, DC, for defendant-intervenors and
consolidated defendant-intervenors.
Kelly, Judge: Before the court for review is the U.S. Department of Commerce’s
(“Department” or “Commerce”) Final Results of Redetermination Pursuant to Court
Remand filed pursuant to the court’s decision in TMK IPSCO v. United States, 40 CIT __,
__, 179 F. Supp. 3d 1328 (2016). See Final Results of Redetermination Pursuant to
Court Remand, Dec. 21, 2016, ECF No. 171 (“Remand Results”). The court remanded
Commerce’s final determination in its countervailing duty (“CVD”) investigation of certain
oil country tubular goods (“OCTG”) from the People’s Republic of China (“China”) to
explain or reconsider its determinations: (1) to use China’s World Trade Organization
(“WTO”) accession date as a cut-off for identifying and measuring countervailable
subsidies; (2) to include two disparate freight rates in Commerce’s benchmark price for
the benefit conferred by the provision of steel rounds for less than adequate remuneration
(“LTAR”) as representative of what an importer would pay; (3) to attribute subsidies
received by Changbao Precision Steel Tube Co., Ltd. (“Precision”) to its parent company
Consol. Court No. 10-00055 Page 3
Jiangsu Changbao Steel Tube Co., Ltd. (“Changbao”) and to all of Changbao’s other
subsidiaries; (4) to attribute subsidies received by four subsidiaries of Tianjin Pipe (Group)
Corp. (“TPCO”) to sales of other subsidiaries of TPCO; (5) that the provision of steel
rounds and billets at LTAR is tied to sales of seamless steel pipe; and (6) to include the
Steel Business Briefing (“SBB”) “East Asia” benchmark data for billets in the benchmark
calculation for the provision of steel rounds and billets. See TMK IPSCO, 40 CIT at __,
179 F. Supp. 3d at 1335; see generally Certain Oil Country Tubular Goods From the
People’s Republic of China, 74 Fed. Reg. 64,045 (Dep’t Commerce Dec. 7, 2009) (final
affirmative countervailing duty determination, final negative critical circumstances
determination) (“Final Results”) and accompanying Issues and Decision Memorandum
for the Final Determination in the Countervailing Duty Investigation of Certain Oil Country
Tubular Goods (“OCTG”) from the People’s Republic of China, PD 318 (Nov. 23, 2009)
(“Final Decision Memo”). 1 Commerce’s Remand Results adequately address the
concerns raised in the court’s prior decision, and Commerce’s revised results are
supported by substantial evidence. Therefore, the Remand Results are sustained.
1
On May 12, 2010, Defendant submitted indices to the public and confidential administrative
records for its final results, which identify the documents that comprise the public and confidential
administrative records to the Commerce’s final determination. The indices to the public and
confidential administrative records to Commerce’s final determination can be located at ECF No.
40. On January 3, 2017, Defendant submitted indices to the public and confidential administrative
records for its Remand Results, which identify documents that comprise the public and
confidential administrative records to Commerce’s Remand Results. Those indices can be
located at ECF Nos. 173-1 and 173-2, respectively. All further references to the documents from
the administrative records to the final results and the remand results are identified by the numbers
assigned by Commerce in these administrative records.
Consol. Court No. 10-00055 Page 4
BACKGROUND
The court presumes familiarity with the facts as discussed in TMK IPSCO.
Nevertheless, the court briefly summarizes facts relevant to the discussion here for ease
of reference. First, in its final determination, Commerce declined to identify and measure
non-recurring subsidies alleged in the petition to have predated China’s accession to the
WTO on December 11, 2001 because Commerce concluded that it could not identify and
measure subsidies prior to that date. See Final Decision Memo at 53. The court held
that Commerce did not articulate a relationship between China’s WTO accession date
and the implementation of reforms that would enable Commerce to identify and measure
countervailable subsidies. TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1343.
Therefore, the court held that Commerce failed to countervail all identifiable and
measurable subsidies, as the statute requires it to do. See id.; see generally Section
701(f) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1671(f)(1)–(2) (2012). 2 The
court remanded to Commerce to
investigate each subsidy program and allocate subsidies beginning on the
first date it could identify and measure the subsidy considering the particular
program in question and the impact of relevant economic reforms on that
program.
TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1344.
2
Although this countervailing duty investigation was initiated on April 28, 2009, the 2012 version
of 19 U.S.C. § 1671(f) applies here because the March 13, 2012 amendment to the statute applies
to all countervailing duty proceedings initiated on or after November 20, 2006 and all civil actions
relating to such proceedings. See Section 701 of the Tariff Act of 1930, as amended, 19 U.S.C.
§ 1671 note (2012) (Effective and Applicability Provisions 2012 Acts). All further citations to the
Tariff Act of 1930, as amended, are to the relevant provisions of Title 19 of the U.S. Code, 2006
edition unless otherwise indicated.
Consol. Court No. 10-00055 Page 5
Second, Commerce included ocean freight quotes from both Maersk and an
unaffiliated freight forwarder used by mandatory respondent Zhejiang Jianli Enterprise
Co., Ltd. (“Jianli”) to generate an average price for ocean freight in calculating its world
market price benchmark to measure the adequacy of remuneration for steel rounds
provided to Jianli in its final determination. See Final Decision Memo at 84. The court
remanded the issue to Commerce to reconsider or further explain its decision to use an
average of these two freight quotes because Commerce had inadequately explained how
both quotes could be representative given the significant disparity between them. See
TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1350–51.
Third, Commerce included monthly export pricing data for billets from SBB “East
Asia” among the data included in its benchmark calculation for determining the adequacy
of remuneration of the provision of steel rounds and billets in its final determination. See
Final Decision Memo at 77. The court granted Commerce’s request for a remand to allow
it to reconsider its determination to include the SBB “East Asia” series pricing data in its
benchmark calculation. See TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1347.
Fourth, Commerce attributed subsidies received by Precision to Changbao,
Precision’s parent company, and to all of Changbao’s other subsidiaries. See Final
Decision Memo at 8. Commerce likewise attributed or cumulated subsidies received by
four of TPCO’s subsidiaries to the consolidated sales of TPCO and all of its subsidiaries.
See Final Decision Memo at 9 (citing Certain Oil Country Tubular Goods From the
People’s Republic of China, 74 Fed. Reg. 47,210, 47,215 (Dep’t Commerce Sept. 15,
2009) (preliminary affirmative countervailing duty determination, preliminary negative
Consol. Court No. 10-00055 Page 6
critical circumstances determination) (“Prelim. Results”). The court held that 19 C.F.R.
§ 351.525(b)(6)(iii) (2009)3 does not give Commerce authority to attribute subsidies
received by a subsidiary to the consolidated sales of the parent company’s other
subsidiaries. TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1357. The court remanded
to Commerce to explain what other authority allows it to attribute subsidies received by
certain subsidiaries of Changbao and TPCO to the consolidated sales of all subsidiaries
of each respective company or reconsider its determination. Id., 40 CIT at __, 179 F.
Supp. 3d at 1358.
Lastly, in its final determination, Commerce attributed the provision of steel rounds
to TPCO’s consolidated sales of all merchandise, not just to its sales of seamless steel
pipe products. See Final Decision Memo 128–29. The court held that Commerce’s
attribution decision is not supported by substantial evidence because the court could not
“discern whether Commerce determined that the provision of steel rounds at LTAR is tied
to sales of seamless pipe.” TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1359. The
court remanded Commerce’s determination to determine whether its tying regulation
applies to TPCO and support its determination with record evidence. See id.
In its remand determination Commerce makes the following determinations.
Under protest, Commerce no longer adopts China’s WTO accession date as a uniform
date when subsidy programs were identifiable and measurable in China. 4 See Remand
3
Further references to the Code of Federal Regulations are to the 2009 edition.
4
The Court of Appeals for the Federal Circuit held that Defendant may preserve its standing to
pursue an appeal even though Defendant may technically be the prevailing party by adopting a
position “under protest”. See Viraj Grp., Ltd. v. United States, 343 F.3d 1371, 1376 (Fed. Cir.
2003).
Consol. Court No. 10-00055 Page 7
Results 11. Instead, Commerce identified four categories of programs alleged in the
petition to assess when “a sufficiently developed legal framework relevant” to each
existed such that Commerce could appropriately evaluate whether a subsidy had been
bestowed. See Remand Results 11, 13–19. Commerce applies the benefit conferred on
the earliest date when the government bestowal was identifiable or measurable. See id.at 31–35. Commerce continues to use the ocean freight quotes provided by Maersk and
by Jianli’s freight forwarder. See id. at 42. Commerce reverses its prior conclusion
regarding the attribution of subsidies received by TPCO’s and Changbao’s subsidiaries.
See id. at 38–39. Commerce maintains its determination to attribute steel rounds and
billets provided at LTAR program to TPCO’s applicable total sales and not solely to sales
of seamless steel pipe. See id. at 46. Finally, Commerce excludes the SBB East Asia
pricing data from its benchmark calculation for steel rounds. See id. at 48.
Commerce’s changes in approach resulted in revised subsidy rates for all
mandatory respondents and for all respondents not individually investigated. See
Remand Results 56. On remand, Commerce assigned mandatory respondents the
following subsidy rates: (1) Changbao a subsidy rate of 28.70%; (2) Jianli a subsidy rate
of 30.56%; (3) TPCO a subsidy rate of 21.48%; (4) Wuxi a subsidy rate of 29.48%. Id.
For all other exporters not individually investigated, Commerce assigned a subsidy rate
of 27.08%.
STANDARD OF REVIEW
The court continues to have jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i)
and 28 U.S.C. § 1581(c) (2006), which grant the court authority to review actions
Consol. Court No. 10-00055 Page 8
contesting the final determination in an investigation of a CVD order. See 19 U.S.C.
§ 1516a(a)(2)(B)(i); 28 U.S.C. § 1581(c) (2012). “The court shall hold unlawful any
determination, finding, or conclusion found . . . to be unsupported by substantial evidence
on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
“The results of a redetermination pursuant to court remand are also reviewed ‘for
compliance with the court’s remand order.’” Xinjiamei Furniture (Zhangzhou) Co. v.
United States, 38 CIT __, __, 968 F. Supp. 2d 1255, 1259 (2014) (quoting Nakornthai
Strip Mill Public Co. v. United States, 32 CIT 1272, 1274, 587 F. Supp. 2d 1303, 1306
(2008)).
DISCUSSION
I. Commerce’s Evaluation of Non-Recurring Subsidy Programs
In TMK IPSCO, the court held that by cutting off its investigation and measurement
of subsidies on December 11, 2001, the date China acceded to the WTO, Commerce had
failed to countervail all identifiable and measurable subsidies, as the statute requires it to
do. See id.; see generally 19 U.S.C. § 1671(f)(1)–(2). The court remanded to Commerce
to investigate each subsidy program and allocate subsidies beginning on the first date it
could identify and measure the subsidy considering the particular program in question
and the impact of relevant economic reforms on that program. TMK IPSCO, 40 CIT at
__, 179 F. Supp. 3d at 1344. Consolidated Plaintiff, United States Steel Corporation
(“U.S. Steel”), contends that Commerce’s determination on remand to evaluate the
subsidy programs in the petition by type of program does not comply with the court’s order
that Commerce investigate “each subsidy program and allocate subsidies beginning on
Consol. Court No. 10-00055 Page 9
the first date it could identify and measure the subsidy considering the particular program
in question.” United States Steel Corporation’s Comments Def.’s Final Results of
Redetermination Pursuant to Remand Order 3–6, Jan. 23, 2017, ECF. No. 174 (“U.S.
Steel Remand Comments”). Alternatively, U.S. Steel argues even if Commerce’s
approach of evaluating subsidy programs by type is legally supported, Commerce’s
conclusions about when credit-oriented subsidy programs and land-oriented subsidy
programs were first identifiable and measurable are unsupported by substantial evidence.
U.S. Steel Remand Comments 6–7. Commerce’s evaluation of subsidy programs in this
investigation is reasonable and consistent with its statutory obligations. Commerce’s
conclusions as to when credit-oriented and land-oriented subsidy programs were first
identifiable and measurable are also supported by substantial evidence.
Commerce generally must impose countervailing duties on merchandise from a
non-market economy (“NME”) country if Commerce makes the findings necessary to
countervail a subsidy more generally under the statute. See 19 U.S.C. § 1671(f)(1)
(2012); see also 19 U.S.C. §§ 1677(5)–(5A) (2006) (setting forth the determinations
Commerce must make before imposing a CVD generally). However, Commerce need
not countervail a subsidy imported from a NME country if Commerce determines it cannot
identify and measure the subsidy in question “because the economy of that country is
essentially comprised of a single entity.” See 19 U.S.C. § 1671(f)(2) (2012). Commerce
has significant discretion in determining whether it can identify and measure subsidies
provided by the government or a public entity within the NME country because the statute
is silent as to when Commerce can identify and measure a subsidy. See 19 U.S.C.
Consol. Court No. 10-00055 Page 10
§ 1671(f)(1)–(2) (2012). Normally, a reviewing court should not disrupt the agency’s
exercise of discretion in fashioning an approach to a problem delegated to it unless the
agency has not supplied a reasoned basis for its action. See Motor Vehicle Mfrs. Ass’n
of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citations omitted).
Nonetheless, the “agency must cogently explain why it has exercised its discretion in a
given manner.” Id. at 48 (citations omitted).
On remand Commerce articulated a rational relationship between specific legal
reforms in China and the effect of such reforms on Commerce’s ability to identify and
measure subsidies. 5 See Remand Results 13–19. Commerce “assessed when a
sufficiently developed legal framework relevant to th[e] particular type of subsidy existed
that would enable [it] to identify the sphere of commercial activity involved, the economic
actors involved and the government action required to bestow that type of subsidy.” Id.
at 11. Commerce identified four types of subsidies alleged in the petition: grants, credit-
oriented subsidies, tax-related subsidies and land-oriented subsidies. See id. at 11–19.
Commerce explained that it evaluated each type of non-recurring subsidy to determine
when China first developed a sufficient “legal framework relevant to that particular type of
subsidy . . . that would enable [it] to identify the sphere of commercial activity involved,
the economic actors involved and the government action required to bestow that type of
subsidy.” Remand Results 11.
5
Commerce only evaluated the countervailability of programs that provided a non-recurring
benefit as early as 1994 because it only allocates the benefit conferred of a non-recurring subsidy
program over the average useful life of the assets involved. See 19 C.F.R. § 351.401(a)–(b). The
average useful life of the assets used in the production of subject merchandise was 15 years.
Remand Results 12.
Consol. Court No. 10-00055 Page 11
Commerce determined that grant programs could first be identified and measured
as of 1994. Id. at 14. Commerce reasoned that the first Company Law took effect in
1994, which marks a point “where distinct economic actors were legally extended the
flexibility to engage in commercial activity” for the first time. Id. Commerce concluded
that credit-oriented subsidies could be identified and measured starting from 1996, which
Commerce grounded in two economic reforms: the 1995 Commercial Bank Law and the
1996 General Rules on Loans. Id. at 15–16. Commerce deduced that the former reform
defined a commercial bank, made commercial banks legally responsible for their own
profits and losses, and afforded commercial banks legal autonomy from the state in
certain matters. Id. at 15. Commerce resolved that the General Rules on Loans set out
legal rights and obligations for lenders and borrowers. Id. at 15–16. Commerce
concluded that both reforms were necessary to “identify distinct legal economic actors in
the credit market as well as to examine specific loans and potential forgiveness of such
loans.” Id. at 16. Commerce determined that “it may have been able to evaluate the
countervailability of tax-related subsidies” starting from 1994. Id. at 18. Commerce
supported its decision by highlighting that before the entry into force of a series of tax
laws, including regulations regarding the value-added tax, consumption taxes, business
taxes, enterprise income taxes, individual income taxes, and resources, China lacked a
comprehensive legal framework that would be necessary to identify tax payers and
assess and collect taxes. Id. at 16. Commerce also explained that the adoption of the
Foreign Trade Law on May 12, 1994 allowed all individuals and legal persons to engage
in foreign trade, which had been restricted to a monopoly of state-trading enterprises
Consol. Court No. 10-00055 Page 12
managed by a Chinese government ministry before the Foreign Trade Law took effect.
Remand Results 17. Therefore, Commerce implied that, prior to the adoption of the
Foreign Trade Law, individual actors could not have taken advantage of certain tax-
related subsidies. See id. Lastly, Commerce discerned that it could identify and measure
land-oriented subsidies as of 1999. Id. at 19. Commerce resolved that until 1999, the
year that both the Revised Land Administration Law and its implementing regulations
came into effect, the Chinese government had not established the legal framework for the
basic elements of land transactions. See id. Therefore, Commerce has articulated a
logical relationship between specific types of Chinese reforms and the legal conditions
necessary to permit Commerce to identify and measure countervailable subsidies for
individual actors within the Chinese economy.
For programs that Commerce determined were established prior to December 11,
2001, Commerce next proceeded to consider each specific subsidy program alleged in
the petition to determine the extent to which any investigated programs may have
provided a benefit prior to December 11, 2001. 6 See id. at 19–35. Depending upon the
6 Commerce did not change its determination with respect to the identification and measurement
of certain non-recurring subsidy programs that it determined based on record information had
been established after December 11, 2001 because the full benefit conferred by such programs
had already been assessed and applied in Commerce’s final determination. See Remand Results
20–25.
Specifically, the subsidy programs that Commerce determined were unaffected by its
application of the December 11, 2001 cut-off date include: (1) Tianjin Binhai New Area; (2) the
Tianjin Economic and Technological Development Area (Science and Technology Fund); (3) the
Sub-central Government Programs to Promote Famous Export Brands and China World Top
Brands; (4) the Jiangsu Province Brands; (5) the Stamp Exemption on Share Transfers Under
Non-Tradeable Share Reform: (6) the Foreign Trade Development Fund (Northeast Revitalization
(footnote continued)
Consol. Court No. 10-00055 Page 13
extent of the information available on the record, Commerce determined that each
program conferred a benefit either based on facts otherwise available or adverse facts
available (“AFA”) because neither the Government of China (“GOC”) nor the mandatory
respondents responded to additional questionnaires issued by Commerce. 7 See
Remand Results 25–29. Although Commerce analyzed the programs by creating
categories, Commerce grouped programs together by category because it concluded that
the nature of the government bestowals are similar for the individual programs examined
under each type. 8 See id. at 50. Commerce states that “[t]he next step in the process
Program); (7) the Five Points, One Line Program; (8) the Forgiveness of Tax Arrears For
Enterprises in the Old Industrial of Northeast China; (9) the Debt-to-Equity Swap for Pangang;
(10) the Bohai Fund’s equity infusion in TPCO; (11) the Exemptions for State Owned Enterprises
from Distributing Dividents to the State; (12) all lending programs offered through government
entities; and (13) the VAT and Tariff Exemptions for the Purchase of Fixed Assets Under the
Foreign Trade Development Fund. See id.
7
Although 19 U.S.C. § 1677e(a)–(b) and 19 C.F.R. § 351.308(a)–(c) each separately provide for
the use of facts otherwise available and the subsequent application of an adverse inference to
those facts, Commerce uses the shorthand term “adverse facts available” or “AFA” to refer to
Commerce’s use of such facts otherwise available with an adverse inference. See, e.g., Remand
Results 27–35.
Commerce requested information regarding the alleged subsidy programs for other
programs alleged in the petition for which it lacked information to determine whether they had
begun prior to December 11, 2001 by sending questionnaires to the Government of China
(“GOC”) and to the mandatory respondents. See id. at 4 (citing Letter Pertaining to GOC
Questionnaire, Rem. PD 2, bar code 3490597-01 (July 25, 2016); Letter Pertaining to Jianli
Questionnaire, Rem PD 3, bar code 3490598-01 (July 25, 2016); Letter Pertaining to TPCO
Questionnaire, Rem. PD 4, bar code 3490600-01 (July 25, 2016); Letter Pertaining to Wuxi
Questionnaire, Rem. PD 5, bar code 3490602-01 (July 25, 2016)). Commerce states that it
received no responses to its request for information. Remand Results 19 (citing Memorandum
Pertaining to Changbao, Jianli, TPCO, Wuxi Status of Respondent Representation, Rem. PD 7,
bar code 3591043-01 (July 27, 2016)). As a result, Commerce based its CVD rates for these
programs on AFA in its Remand Results.
8
For example, Commerce first determined identifying and measuring grants does not require a
“specific legal framework guiding government action,” but does require that Commerce can
“identify distinct economic actors.” Remand Results 13. Commerce then identified that the entry
into force of the first Company Law in 1994, which recognized the legal standing of privatized
(footnote continued)
Consol. Court No. 10-00055 Page 14
would have been to evaluate the countervailability of each program from the starting point
or year established for a particular category.” Id. at 50. It is reasonably discernible that
Commerce categorized the investigated programs by type in order to efficiently allocate
its resources. See id.
Lacking information on the record for certain subsidy programs alleged in the
petition, Commerce applied an adverse inference that they were in effect prior to
December 11, 2001 and that the respondents benefited from the program. 9 Remand
Results 31. Commerce used its standard AFA rate selection methodology to apply an
AFA rate for these individual programs. 10 Id. at 31–35. For the State Key Technology
firms and “setting forth principles of business autonomy, responsibility for profits and losses, and
right to own assets,” represents the threshold where China transitioned “to a phase of economic
development where distinct economic actors were legally extended the flexibility to engage in
commercial activity.” See id. at 14–15. Therefore, it is reasonably discernible that Commerce
concludes that identifying and measuring all grants requires it to identify benefits to distinct
economic actors and match such benefits to individual economic actors. See id.
9
Specifically, Commerce applied an adverse inference that the following individual non-recurring
subsidy programs were countervailable from the time the category of bestowal was first
identifiable and measurable: (1) Export Assistance Grants, Program to Rebate Antidumping Fees,
and Grants to Loss-Making SOEs; and (2) Provision of Land and/or Land Use Rights for SOEs
for LTAR. See Remand Results 31–32; 34–35.
10
For purposes of calculating the AFA rate, Commerce found all alleged programs for which it
requested a questionnaire response countervailable because respondents withheld requested
information and significantly impeded the proceeding. See Remand Results 28. Because the
GOC and the mandatory respondents failed to participate, Commerce applied the following
hierarchy to select appropriate subsidy rates for the subsidy programs for which it applied AFA:
(a) [Commerce] first applied, where available, the highest above de minimis
subsidy rate calculated for an identical program from any segment of this
proceeding; (b) absent such a rate, [Commerce] applied, where available, the
highest above de minimis subsidy rate calculated for a similar program for any
segment of this proceeding; (c) absent an above de minimis subsidy rate
calculated for the same or similar program in any segment of proceeding,
[Commerce] applied the highest above de minimis calculated subsidy rate for
identical, or if not available, a similar program from any CVD proceeding
involving the country in which the subject merchandise is produced (i.e.,
(footnote continued)
Consol. Court No. 10-00055 Page 15
Project Fund grant program, Commerce found it had adequate record information to
determine that the program was established on September 10, 1999. Remand Results
32. Lacking any information on the usage of the program by individual mandatory
respondents prior to December 11, 2001, Commerce inferred that the program conferred
a benefit on all mandatory respondents for the years 1999–2001 and applied an AFA rate
of 0.58 percent, the highest above de minimis rate calculated from any similar program in
any CVD proceeding involving China, to mandatory respondents Changbao Jianli, and
Wuxi Seamless Oil Pipe Co., Ltd. (“Wuxi”). Id. at 33. For mandatory respondent TPCO,
although Commerce had information on the company’s use of this program from
December 11, 2001 through the end of 2008, Commerce states it lacked information on
TPCO’s use of the program from 1999 through December 11, 2001. Id. To fill in the
missing information, Commerce added an AFA rate of 0.03 percent to the calculated rate
from its final determination of 0.01 (i.e., a combined rate of 0.04 percent) to reflect the
inferred benefit received during the years TPCO had not provided a response. Id.
Commerce found that most of the preferences provided by the exemption of customs
duties for the importation of instruments and equipment in the High-Tech Industrial
Development Zones program were already properly allocated in its final determination
[China]), provided the producer of the subject merchandise or the industry to
which it belongs could have used the program for which the rates were
calculated. Absent an above de minimis rate for the same or similar program
from any CVD proceeding involving [China], [Commerce] applied the highest
calculated rate from any program in any CVD proceeding for [China].
Id. at 28–29.
Consol. Court No. 10-00055 Page 16
because they represented recurring benefits allocated in the year received. 11 Remand
Results 33. Nonetheless, Commerce applied an AFA rate of 9.71 percent to this program
to reflect the exemption of customs duties for the importation of instruments and
equipment aspect of the program, which Commerce found is a non-recurring benefit. Id.
at 33–34.
U.S. Steel argues that the cut-off dates adopted by Commerce for each type of
program are as arbitrary as Commerce’s use of China’s accession to the WTO in its final
determination. See U.S. Steel Remand Comments 4–5. The court labeled Commerce’s
selection of China’s WTO accession date as arbitrary because Commerce failed to
identify specific economic reforms that occurred on China’s accession date and match
those reforms to conditions it deemed necessary to identify and measure subsidies. TMK
IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1343. Here, the dates adopted for each type of
subsidy program tie specific reforms to Commerce’s ability to identify the sphere of
commercial activity involved, the economic actors involved, and the government action
required to bestow the type of subsidy. See Remand Results 13–19. Therefore,
Commerce identifies the dates that specific reforms are implemented and connects those
reforms to the presence of legal conditions it reasonably deemed necessary to identifying
and measuring a particular type of bestowal. U.S. Steel points to no reason or instance
where one program of a particular type would be identifiable and measurable before
11
For recurring benefits, Commerce allocates those benefits or expenses to the year in which
the benefit is received. 19 C.F.R. § 351.524(a). In other words, only recurring benefits bestowed
during the POI could possibly be countervailable. See id. Therefore, recurring programs were
unaffected by Commerce’s determination to apply a cut-off date for identifying and measuring
non-recurring subsidies.
Consol. Court No. 10-00055 Page 17
another program of the same type. Therefore, Commerce’s determination to establish
categories of programs and determine when each type of program would first be
countervailable and measurable is reasonable and consistent with the statutory
obligations to countervail all identifiable and measurable subsidies in a NME country.
U.S. Steel also argues that Commerce’s adoption of a uniform cut-off date for each
type of subsidy is arbitrary because it is inconsistent with Commerce’s conclusion that the
process of economic reform is uneven and may take hold in some sectors before others.
U.S. Steel Comments 4. But the court faulted Commerce’s adoption of the December 11,
2001 cut-off date as arbitrary because Commerce failed to identify reforms that occurred
on December 11, 2001 or explain how any such reforms permitted it to identify and
measure subsidies. See TMK IPSCO, 40 CIT __, 179 F. Supp. 3d at 1343. Even if
reforms identified are uneven and take hold in different sectors of the economy or areas
of the country before others, as U.S. Steel contends, Commerce’s investigation of types
of programs focused on the most basic legal conditions that would be necessary to
identify a specific type of subsidy program. See Remand Results 13–19. Commerce
cannot, for example, identify and measure the benefit provided by a specific loan to a
specific party before it is possible to identify a loan as a legal, binding contract between
distinct parties generally. Based on Commerce’s logic, it is possible that a specific
program could be identifiable and measurable later than the category of program to which
it belongs, but not earlier. Commerce has articulated a logical relationship between
specific types of reforms and the legal conditions necessary to permit Commerce to
identify and measure countervailable subsidies for individual actors within the Chinese
Consol. Court No. 10-00055 Page 18
economy. See Remand Results 13–19. Therefore, in this investigation Commerce’s
adoption of a uniform cut-off date for each category of subsidy program is reasonable.
In the alternative, U.S. Steel argues that, even if Commerce’s practice of
examining subsidy programs by type is reasonable, the specific cut-off dates adopted for
land-oriented subsidies and credit-oriented subsidies are not supported by substantial
evidence. 12 U.S. Steel Remand Comments 6–7. For credit-oriented subsidies, U.S. Steel
“disagrees with Commerce’s conclusion that the earliest it could evaluate the
countervailability of credit-oriented subsidies is 1996.” Id. at 6 (citing Remand Results
16). U.S. Steel focuses on Commerce’s acknowledgment that specific economic actors
involved in providing credit in China could be identified as of 1993, and U.S. Steel
contends this evidence renders Commerce’s conclusion that credit-oriented subsidies
could not be identified and measured until 1996 unsupported by substantial evidence. Id.
at 7. Commerce notes that before a credit-oriented subsidy can be considered
countervailable in an NME, Commerce “needs to be able to identify the loan as a legal,
binding contract between distinct parties.” Remand Results 15. Although Commerce
says that it could identify specific actors involved in the provision of credit as early as
1993, it is reasonably discernible that Commerce determined the banking sector reforms
leading up to 1993 did not permit the identification of a binding contract between distinct
parties. See id. Commerce notes that, until the passage of the 1995 Commercial Bank
Law, commercial banks were not responsible for their own profits and losses, and banks
12
The court considers any substantial evidence challenges to Commerce’s determinations of
when it could identify and measure other alleged subsidy programs waived because U.S. Steel
challenges the specific cut-off dates selected for only land-oriented subsidies and credit-oriented
subsidies. See U.S. Steel Remand Comments 6–7.
Consol. Court No. 10-00055 Page 19
lacked legal autonomy from the state. See id. In addition, Commerce states that the
General Rules on Loans, enacted in 1996, regulated activities related to loans and
protected the lawful rights and interests of all parties. Id. at 15–16. In particular,
Commerce credited the 1996 General Rules on Loans as setting the legal rights and
obligations for both lenders and borrowers as providing the legal basis for defining the
legal terms of a given loan. Id. at 16. Commerce reasonably determined that both the
identification of distinct legal actors and the legal underpinnings required to render a loan
legally binding are necessary to identifying and measuring credit-oriented subsidies. See
id. at 15–16. U.S. Steel offers no evidence that the legal requirements to render a loan
legally binding between independent economic actors occurred earlier than 1996. The
court declines to reweigh the evidence.
Likewise, for land-oriented subsidies, U.S. Steel argues that Commerce’s own
analysis indicates that it can identify and measure these subsidies from 1986 when the
Land Administration Law first “allowed for the ownership of land-use rights and, in certain
circumstances, their transfer.” U.S. Steel Remand Comments 7 (citing Remand Results
18). U.S. Steel contends, that, although subsequent reforms may have provided
additional incentive, it is unreasonable for Commerce to conclude that those reforms were
necessary to first identify and measure such subsidies. Id. Commerce justified its
assessment that the conditions were insufficient to allow for the identification and
measurement of land-oriented subsidies in 1986 by highlighting: (1) the fact that the Land
Administration law of 1986 conflicted with China’s constitution, which banned selling,
leasing, and transferring land; and (2) that land-use rights were vague and ill-defined until
Consol. Court No. 10-00055 Page 20
the legal framework for basic elements of land transactions took effect in 1999. Remand
Results 18–19. The court defers to Commerce’s reasonable determination that the legal
framework for the basic elements of property transactions is necessary for identifying and
measuring subsidies. U.S. Steel highlights no record evidence indicating that the
necessary legal conditions were in place prior to 1999.
II. Continued Inclusion of the Ocean Freight Quote from Jianli’s Freight
Forwarder
The court remanded to Commerce to reconsider or further explain its decision to
use an average of two freight quotes from Maersk and Jianli’s freight-forwarder because
Commerce had not adequately explained how two such disparate quotes could be
representative of freight prices available to respondents. See TMK IPSCO, 40 CIT at __,
179 F. Supp. 3d at 1350–51. U.S. Steel continues to challenge Commerce’s explanation.
See U.S. Steel Remand Comments 10–12. Commerce has now adequately explained
how both quotes could be reflective of market rates and, as a result, its determination is
supported by substantial evidence.
If Commerce determines that the government of a country or any public entity is
providing, directly or indirectly, a countervailable subsidy, then Commerce shall impose a
duty equal to the amount of the benefit conferred by the subsidy subject to certain
adjustments. See 19 U.S.C. §§ 1671(a),1677(6). Where a good or service is provided
to a recipient by a government or state-owned entity, if such goods are provided for less
than adequate remuneration, a benefit shall normally be treated as conferred. See 19
U.S.C. § 1677(5)(E)(iv). Commerce generally seeks to measure the adequacy of
remuneration by comparing the government price to a market-determined price for the
Consol. Court No. 10-00055 Page 21
good from actual transactions in the country in question (i.e., a tier i benchmark). 19
C.F.R. § 351.511(a)(2)(i). However, if there is no useable market-determined price with
which to make the comparison, Commerce will measure the adequacy of remuneration
by comparing the government price to a world market price “where it is reasonable to
conclude that such price would be available to purchasers in the country in question” (i.e.,
a tier ii benchmark). 19 C.F.R. § 351.511(a)(2)(ii). Further, when measuring the
adequacy of remuneration, Commerce must adjust the benchmark price to reflect the
price that a firm actually paid or would pay if it imported the product, including delivery
charges. 19 C.F.R. § 351.511(a)(2)(iv). Commerce has broad discretion to determine
how to adjust the world market benchmark price to reflect delivery charges, such as freight
charges that may be incurred by purchasers so long as such adjustments are reasonable.
On remand, Commerce continued to find that the ocean freight quotes provided by
Maersk and by Jianli’s freight forwarder are both reflective of market rates that the
importer would have paid to import steel rounds and billets notwithstanding the pricing
disparity. Remand Results 42. Commerce explained that the pricing disparity results
from the avenue the importer chooses to import the products, but both paths reflect
market rates for ocean freight and are representative of the rates an importer would have
paid. See id. at 43. Commerce reasoned that working directly with a shipping company
may result in a different freight cost than contracting with a freight forwarder that works
with a shipping company. Id. Commerce supports its conclusion that both the Maersk
rate and that of Jianli’s freight forwarder are representative of market rates by relying
upon a statement from Jianli’s freight forwarder explaining that “most shipping companies
Consol. Court No. 10-00055 Page 22
and freight forwarders that work with them arrange for the shipment of goods from China
to the destinations identified . . . and then offer lower rates on the China-bound leg of their
voyage.” Id. at 42 (citing Jianli Group Submission of Factual Information at Attach. 1, CD
87 (Oct. 5, 2009) (“Jianli Freight Quote”)). Moreover, Commerce concluded that this
“deadfreight rate” is negotiated between the freight forwarder and the shipping company
because the service contracts submitted by Jianli reflect the practice of offering lower
rates on the China-bound leg. 13 Id. at 43. Commerce found that record evidence
demonstrates that the prices provided to Jianli by its freight forwarder are actual shipping
charges paid by the freight forwarder’s customers, and not solely by Jianli, during the
calendar year 2008, see id. at 54, which coincides with the period of investigation (“POI”).
See id. at 3. Therefore, Commerce’s determination that Jianli’s freight forwarder’s freight
pricing reflects market rates that an importer would have paid is supported by substantial
evidence.
U.S. Steel implies that it is unreasonable to conclude that two freight options
available in the marketplace could be so disparate because no importer would choose
the higher-priced route in such an environment. See U.S. Steel Remand Comments 11.
It is reasonably discernible that Commerce concluded both the Maersk price quote data
and that of Jianli’s freight forwarder are market prices available to importers of steel billets
because no evidence indicates these rates were not available to importers other than
Jianli and market-driven reasons other than price could motivate some importers to
13
Commerce specifically notes that the contracts between Jianli and its freight forwarder include
the line item “3.) DEADFREIGHT APPLIES IF FINAL CGO QTTY IS LESS THAN OR CGO
DIMENSION IS DIFFERENT FROM DESCRIBED IN PARA2.)” Remand Results 42 (citing Jianli
Freight Quote at Attach. 1).
Consol. Court No. 10-00055 Page 23
contract with a freight provider directly rather than through a freight forwarder for a
“deadfreight” rate. See Remand Results 43. U.S. Steel offers no evidence importers
always prefer a “deadfreight” rate that represents the lowest aggregate price at the
expense of any other considerations driven by the needs of their business or of their
customers. The court declines to speculate why an importer may have selected a
shipping path that may result in a higher aggregate rate or to reweigh the evidence. The
existence of market-driven reasons to prefer either option renders Commerce’s
determination that both freight rates are market rates supported by substantial evidence.
U.S. Steel also questions the reliability of the rate of Jianli’s freight forwarder,
implying that it “is not normal market price, but rather a sweetheart deal.” U.S. Steel
Remand Comments 11. However, Commerce references the affidavit provided by Jianli’s
freight forwarder, which indicates that the prices provided are actual shipping charges
paid by the freight forwarder’s customers from multiple countries to Shanghai throughout
the PO. Remand Results 54 (citing Jianli Freight Quote at 2–3, Attach. 1). U.S. Steel
provides no record evidence supporting its speculation that the prices reflect a special
deal not available to other importers. In fact, Defendant points out that Jianli’s pricing
data, which is relied upon by Commerce, reflects a series of transactions from more than
one customer throughout the POI. See Def.’s Resp. United States Steel Corporation’s
Comments Remand Redetermination 14, Mar. 7, 2017, ECF No. 182.
III. Exclusion of SBB East Asia Pricing Data From Tier ii Benchmark
The court remanded Commerce’s determination to include the SBB East Asia
pricing from its tier ii benchmark price for steel rounds and billets because Commerce’s
inclusion of this pricing data in its benchmark calculation is not supported by substantial
Consol. Court No. 10-00055 Page 24
evidence. See TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1347. On remand,
Commerce determined that the SBB East Asia pricing data should be excluded from its
tier ii benchmark pricing for steel rounds. Remand Results 48.
As already discussed, if there is no useable market-determined price with which to
make the comparison, Commerce will measure the adequacy of remuneration by
comparing the government price to a world market price “where it is reasonable to
conclude that such price would be available to purchasers in the country in question” (i.e.,
a tier ii benchmark). 14 19 C.F.R. § 351.511(a)(2)(ii). Here, Commerce concludes that the
fact that the SBB East Asia pricing data could include Chinese import prices presents “a
more compelling rationale for removing the data source from [its] benchmark.” Remand
Results 48. To support its determination to move from a tier i benchmark, based on actual
transactions in China, to a tier ii benchmark, based on world market prices, Commerce
relies on the potential that Chinese prices for steel rounds and billets could distort the
SBB East Asia data. See id. Commerce reasonably concluded that it could not reconcile
including distorted prices in a world market price benchmark. See id. No party challenges
the exclusion of the SBB East Asia pricing data from Commerce’s tier ii benchmark for
steel billets and rounds. Commerce has complied with the court’s remand order.
IV. Subsidy Attribution
The court held that Commerce did not explain what authority allowed it to attribute
steel rounds and billets received by one subsidiary of TPCO or Changbao for LTAR to
14
Commerce generally seeks to measure the adequacy of remuneration by comparing the
government price to a market-determined price for the good from actual transactions in the
country in question (i.e., a tier i benchmark). 19 C.F.R. § 351.511(a)(2)(i).
Consol. Court No. 10-00055 Page 25
the consolidated sales of all of each respective parent company’s subsidiaries in its final
determination. TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1357–58. The court
remanded to Commerce to explain its attribution methodology or reconsider its
determination. Id., 40 CIT at __, 179 F. Supp. 3d at 1358. On remand, Commerce
reconsidered its determination and agreed it should not have attributed subsidies
received by certain TPCO and Changbao subsidiaries to all of each company’s respective
subsidiaries. See id. at 38. In its Remand Results, Commerce attributed subsidies
received by Precision to the combined unconsolidated sales of Changbao and to
Precision’s sales under 19 C.F.R. § 351.525(b)(6)(ii). Id. Commerce likewise revisited
its attribution of subsidies for the TPCO entities, and declined to attribute subsidies
received by TPCO’s subsidiaries Tianguan Yuantong Pipe Product Co., Ltd. (“TPCO
Yuantong”), Tianjin Pipe Iron Manufacturing Co., Ltd. (“TPCO Iron”), Tianjin Pipe
International Economic and Trading Co., Ltd. (“TPCO IETC”), and TPCO Charging
Development Co., Ltd. (“TPCO Charging”) to all of TPCO’s subsidiaries. See Remand
Results 38–39. Commerce’s determinations on remand comply with the court’s remand
order.
In general, Commerce “calculate[s] an ad valorem subsidy rate by dividing the
amount of the benefit allocated to the period of investigation . . . by the sales value during
the same period of the product or products to which [Commerce] attributes the subsidy.”
19 C.F.R. § 351.525(a). Ordinarily, Commerce divides the subsidies received by a
company only by the sales of that company. See 19 C.F.R. § 351.525(b)(6)(i). However,
if two or more corporations are cross-owned, Commerce’s regulations provide a number
Consol. Court No. 10-00055 Page 26
of exceptions to its default attribution rule. 15 See 19 C.F.R. § 351.525(b)(6)(ii)–(v). If two
cross-owned corporations produce the same subject merchandise, Commerce will
attribute subsidies received by either or both corporations to the products produced by
both corporations. 19 C.F.R. § 351.525(b)(6)(ii). If the firm that received a subsidy is a
holding company, including a parent company with its own operations, Commerce will
attribute the subsidy to the consolidated sales of the holding company and its
subsidiaries. 19 C.F.R. § 351.525(b)(6)(iii). If an input supplier and a downstream
producer are cross-owned, and production of the input product is primarily dedicated to
production of the downstream product, Commerce will attribute subsidies received by the
input producer to the combined sales of the input and downstream products produced by
both corporations (excluding sales between the two corporations). 19 C.F.R.
§ 351.525(b)(6)(iv). Where the other attribution exceptions do not apply, “if a corporation
producing non-subject merchandise received a subsidy and transferred the subsidy to a
corporation with cross-ownership, [Commerce] will attributed the subsidy to products sold
by the recipient of the transferred subsidy.” 19 C.F.R. § 351.525(b)(6)(v). Commerce
also cumulates subsidies provided to a trading company exporting subject merchandise
with benefits from subsidies provided to a firm producing subject merchandise that is sold
through a trading company regardless of whether those firms are affiliated. 19 C.F.R.
§ 351.525(c).
15
Commerce’s regulations define cross ownership as “exist[ing] between two or more
corporations where one corporation can use or direct the individual assets of the other
corporation(s) in essentially the same ways it can use its own assets.” 19 C.F.R. § 351.525(6)(vi).
Consol. Court No. 10-00055 Page 27
Here, Commerce attributed subsidies received by Precision to the combined
unconsolidated sales of Changbao and to sales of Precision under 19 C.F.R.
§ 351.525(b)(6)(ii) because it found that both corporations are cross-owned and produce
subject merchandise. See Remand Results 38; see also Final Decision Memo at 7–8
(citing Prelim Results, 74 Fed. Reg. at 47,214 (stating that Changbao and Precision are
cross-owned and that Precision is a producer of subject merchandise just like Changbao,
a mandatory respondent in this investigation). Commerce applied the same attribution
rule to attribute subsidies received by TPCO Yuantong to TPCO because it found that
TPCO and its cross-owned subsidiary, TPCO Yuantong, both produced subject
merchandise. Remand Results 38. In addition, Commerce included service sales in
TPCO Yuantong’s sales value of subject merchandise because Commerce credited
TPCO Yuantong’s description of the sales as related to “heat treatment processing.” Id.
at 38–39 (citing TPCO Verification Report at 13, PD 271 (Oct. 29, 2009)). Commerce
supported its determination to attribute the steel rounds and billets provided to TPCO Iron
under 19 C.F.R § 351.525(b)(6)(iv) to the combined sales of TPCO Iron, TPCO Yuantong,
and TPCO, less intercompany sales, by noting that all three companies are cross-owned
and TPCO Iron was identified in the investigation as a producer of inputs primarily
dedicated to producing downstream products produced by TPCO and TPCO Yuantong.
Id. at 39. Commerce supported its determination to attribute the steel rounds provided at
LTAR to TPCO Charging to the unconsolidated sales of TPCO by noting that TPCO
Charging does not meet any attribution method under 19 C.F.R. §§ 351.525(b)(6)(ii)–(iv)
and that TPCO Charging, which does not produce subject merchandise, provided steel
Consol. Court No. 10-00055 Page 28
rounds to TPCO. Id.; see also Prelim. Results, 74 Fed. Reg. at 47, 215 (stating that
TPCO stated that Charging acts as a trading company and does not produce any
merchandise). Lastly, Commerce cumulated steel rounds and billets provided for LTAR
to TPCO IETC, which was identified as a trading company, with those received by TPCO
as well benefits received by TPCO’s other subsidiaries TPCO Yuantong, and TPCO
Charging. Id. at 39–40. Therefore, Commerce used TPCO IETC’s total unconsolidated
sales value without removing inter-company sales. Id. at 39–40.
No party challenges Commerce’s attribution methodology. Commerce has
explained its attribution methodology and supports its attribution methodology by referring
to uncontroverted record evidence. Therefore, Commerce has complied with the court’s
order.
V. Provision of Steel Rounds Tied to Production of Subject Merchandise
The court remanded Commerce’s decision to attribute the benefit received by
TPCO from the provision of steel rounds at LTAR because the court could not “discern
whether Commerce determined that the provision of steel rounds at LTAR is tied to sales
of seamless pipe.” TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1359. On remand,
Commerce finds no record evidence as to the purpose or intended use of the steel rounds
and billets under the subsidy program. See Remand Results 46. Therefore, Commerce
again attributes the subsidies at issue to TPCO’s applicable total sales, not just sales of
seamless pipe. See id. U.S. Steel continues to challenge that substantial evidence
supports Commerce’s determination. U.S. Steel Remand Comments 8–10. The court
disagrees with U.S. Steel.
Consol. Court No. 10-00055 Page 29
Commerce attributes the benefits of subsidies to all products exported by a firm.
19 C.F.R. § 351.525(b)(3). However, if a firm produces more than one product,
Commerce will attribute the subsidy only to sales of a particular product if the subsidy is
tied to the production or sale of only that product. See 19 C.F.R. § 351.525(b)(5). If
Commerce cannot determine that the subsidy is tied to the production or sale of a
particular product, then Commerce follows its default rule of attributing subsidies to all
products exported by the firm. See 19 C.F.R. §§ 351.525(b)(3), (b)(5). Commerce has
discretion in determining how to evaluate whether a subsidy is tied to the production or
sale of a particular product because neither the statute nor Commerce’s regulation
defines when a subsidy is tied to the production or sale of a particular product. See 19
U.S.C. § 1677(5)(E)(iv); 19 C.F.R. §§ 351.525(b)(2), (b)(5). As a matter of practice
Commerce evaluates the purpose of the subsidy based on information available at the
time of bestowal and does not trace how the subsidy is actually used by companies. See
id. at 45 (citing Large Residential Washers From the Republic of Korea, 77 Fed. Reg.
75,975 (Dep’t Commerce Dec. 26, 2012) (final affirmative CVD determination); and
accompanying Issues and Decision Memorandum for the Final Determination in the
Countervailing Duty Investigation of Large Residential Washers from the Republic of
Korea at 41, C-580-869, (Dec. 18, 2012), available at
http://ia.ita.doc.gov/frn/summary/korea-south/2012-31078-1.pdf (last visited Apr. 28,
2017) (“Large Residential Washers from Korea I&D”)).
Here, Commerce attributed the provision of steel rounds and billets at LTAR to all
sales of TPCO rather than to only sales of seamless pipe tubes because record evidence
Consol. Court No. 10-00055 Page 30
does not establish that the GOC intended the subsidy to benefit or knew that the subsidy
would benefit the production of seamless pipe and tube at the time of bestowal. Remand
Results 46. Commerce evaluated the subsidy based upon information at the time of
bestowal and there were no documents or statements from the GOC or from state-owned
producers and suppliers on the purpose or intended use of steel rounds and billets under
the program. Id. at 46. U.S. Steel points to no evidence demonstrating that the GOC
intended the subsidy to benefit or knew that the subsidy would benefit the production of
seamless pipe and tube at the time of bestowal.
U.S. Steel contends that the GOC’s statement in its response to Commerce’s
request for a list of industries in China that directly purchase steel rounds that “[s]teel
rounds (billets in round shape that can be used to produce OCTG) are [purchased] by the
OCTG industry,” renders Commerce’s conclusion unreasonable. U.S. Steel Remand
Comments 9 (citing Response of the Government of the People’s Republic of China to
the Department’s Initial Questionnaire at 49, PD 107 (July 20, 2009)). However,
Commerce reasoned that “the mere fact that a good ‘can be used’ does not demonstrate
that the provision of that good is tied to a particular product within the meaning of 19
C.F.R. § 351.525(b)(5).” Remand Results 53. In its final determination, Commerce noted
that the GOC states that steel billet was used “in a number of industries, including rebar,
plain bar, merchant bar, light sections, narrow strip, wire rod, and seamless tubes.” Final
Decision Memo at 75. Moreover, Commerce states that its practice is to only “find that a
subsidy is tied to a particular product when the intended use is known to the subsidy giver
(in this case the GOC) and so acknowledged prior to [or] concurrent with the bestowal of
Consol. Court No. 10-00055 Page 31
the subsidy.” Remand Results 46 (citing Countervailing Duties, 63 Fed. Reg. 65,348,
65,403 (Dep’t Commerce Nov. 25, 1998) (final rule) (explaining that Commerce looks at
information available at the time of bestowal to analyze the purpose of the subsidy)). The
POI for Commerce’s investigation of OCTG from China is January 1, 2008 through
December 31, 2008. See id. at 3. It is therefore reasonably discernible that Commerce
concluded that that the GOC’s questionnaire response is not an acknowledgment that the
purpose of the subsidy is to benefit producers of OCTG prior to or concurrent with the
bestowal of the subsidy because the statement was made in response to Commerce’s
questionnaire issued in 2009. See id. (citing Countervailing Duties, 63 Fed. Reg. at
65,403).
U.S. Steel also argues that Commerce’s statement that the GOC has a policy of
“supporting and promoting the production of innovative and high-value added products,
including OCTG” contradicts Commerce’s tying determination. U.S. Steel Remand
Comments 9 (citing Prelim. Results, 74 Fed. Reg. at 47,217). It is also reasonably
discernible that Commerce did not consider this statement inconsistent with its tying
determination because the GOC’s acknowledgment of support for one of several products
does not mean that it knew and acknowledged prior to or concurrent with the bestowal of
the subsidy that the program was intended to benefit any one of those products. See
Remand Results 46 (citing Countervailing Duties, 63 Fed. Reg. at 65,403 (stating that
Commerce analyzes the purpose of the subsidy based on information available at the
time of bestowal)).
Consol. Court No. 10-00055 Page 32
Lastly, U.S. Steel argues that Commerce’s tying determination is unsupported
because there is no affirmative evidence suggesting that the steel rounds and billets
provided at LTAR are used to produce any products other than OCTG. See U.S. Steel
Remand Comments 10. However, Commerce makes clear that its practice does not
consider the actual use of the products provided under the subsidy program in evaluating
whether the subsidy program is tied to the production of subject merchandise. See
Remand Results 45 (citing Large Residential Washers from Korea I&D at 41). Commerce
has explained this practice in the past by noting that tracing funds only establishes
whether funds are actually used for their stated purpose or the purpose Commerce
evinces from record evidence and not whether a benefit is conferred or what specific
products the grantor intended to benefit. See Countervailing Duties, 63 Fed. Reg. at
65,403. U.S. Steel highlights no reason this practice is unreasonable generally or as
applied here. Commerce’s determination is therefore supported by substantial evidence.
CONCLUSION
Therefore, for the reasons discussed, the court sustains the Remand Results.
Judgment will enter accordingly.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: May 3, 2017
New York, New York