Archer Daniels Midland Co. v. United States ( 2019 )

Slip Op. 19-103
UNITED STATES COURT OF INTERNATIONAL TRADE
ARCHER DANIELS MIDLAND
COMPANY, CARGILL,
INCORPORATED, AND TATE & LYLE
AMERICAS LLC,
Plaintiffs, Before: Mark A. Barnett, Judge
Court No. 18-00160
v.
UNITED STATES,
Defendant.
OPINION
[Sustaining the U.S. Department of Commerce’s final negative determination.]
Dated: August 2, 2019
Patrick J. Togni and Stephen A. Jones, King & Spalding LLP, of Washington, DC, for
Plaintiffs.
Meen Geu Oh, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for Defendant. With him on the brief were
Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and
Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Mykhaylo A.
Gryzlov, Senior Counsel, Office of the Chief Counsel for Trade Enforcement and
Compliance, U.S. Department of Commerce, of Washington, DC.
Barnett, Judge: Plaintiffs, Archer Daniels Midland Company, Cargill,
Incorporated, and Tate & Lyle Americas LLC (collectively, “Archer Daniels”) move,
pursuant to U.S. Court of International Trade Rule 56.2, for judgment on the agency
record, challenging the U.S. Department of Commerce’s (“Commerce” or “the agency”)
final negative determination in the countervailing duty (“CVD”) investigation of citric acid
and certain citrate salts from Thailand. See Mot. for J. on the Agency R., ECF No. 19;
Court No. 18-00160 Page 2
Citric Acid and Certain Citrate Salts From Thailand, 83 Fed. Reg. 26,004 (Dep’t
Commerce June 5, 2018) (final negative countervailing duty determination, and final
negative critical circumstances determination) (“Final Determination”), ECF No. 15-1,
and accompanying Issues and Decision Mem., C-549-834 (May 29, 2018) (“I&D
Mem.”), ECF No. 15-2. 1
Archer Daniels’ dispute stems from the importation of select equipment and
machinery (“the machinery”) from the People’s Republic of China (“China”) into Thailand
by COFCO Biochemical (Thailand) Co., Ltd. (“COFCO”); Niran (Thailand) Co., Ltd.
(“Niran”); and Sunshine Biotech International Co., Ltd. (“Sunshine”) (collectively,
“Respondents”). Respondents imported the machinery duty-free pursuant to Section 28
of Thailand’s Investment Promotion Act (“IPA Section 28”), a subsidy program
exempting certain imported machinery from payment of import duties when used in
specified projects. See I&D Mem. at 8-12. Commerce determined, however, that duty-
free importation of the machinery from China pursuant to IPA Section 28 conferred no
benefit because, absent IPA Section 28 eligibility, the duty rate on the machinery
imports would have been zero pursuant to the “ASEAN-China FTA.” 2 I&D Mem. at 11,
18.
1 The administrative record for this case is divided into a Public Administrative Record
(“PR”), ECF No. 15-3, and a Confidential Administrative Record (“CR”), ECF No. 15-4.
Parties submitted joint appendices containing record documents cited in their briefs.
See Public J.A. (“PJA”), ECF No. 28; Confidential J.A. (“CJA”), ECF No. 27. The court
references the confidential versions of the relevant record documents, unless otherwise
specified.
2 “ASEAN-China FTA” stands for “Association of Southeast Asian Nations (ASEAN)-
China Free Trade Area (FTA).” I&D Mem. at 2.
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Archer Daniels contends that Commerce’s determination is unsupported by
substantial evidence and is otherwise not in accordance with law because the record
shows that Respondents did not import the machinery pursuant to the ASEAN-China
FTA and could not have complied with its requirements. See Pls.’ Rule 56.2 Br. in
Supp. of Mot. for J. on the Agency R. (“Pls.’ Br.”) at 1-2, ECF No. 31. Defendant, United
States (“the Government”), contends that Commerce’s determination is supported by
substantial evidence and is otherwise in accordance with law because the record is
“replete” with documents demonstrating that Respondents’ machinery “originated from
China.” See Def.’s Corrected Resp. to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R.
(“Def.’s Resp.”) at 5, ECF No. 34. For the reasons discussed herein, Archer Daniels’
motion is denied.
BACKGROUND
I. Legal Framework
In order to offset the unfair competitive advantages created by foreign subsidies,
“Commerce is required to impose countervailing duties on merchandise that is produced
with the benefit of government subsidies” when it causes material injury to a domestic
industry. Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365, 1369 (Fed.
Cir. 2014); see also Zenith Radio Corp. v. United States, 437 U.S. 443, 455-56 (1978)
(discussing the purpose of CVD law); 19 U.S.C. § 1671(a). “Such a subsidy exists
when (1) a foreign government provides a financial contribution (2) to a specific industry
and (3) a recipient within the industry receives a benefit as a result of that contribution.”
Fine Furniture (Shanghai), 748 F.3d at 1369 (citing 19 U.S.C. § 1677(5)(B)). In other
Court No. 18-00160 Page 4
words, to constitute a countervailable subsidy, a foreign government must provide “a
specific financial contribution to a party and that party [must] benefit[] from the
contribution.” Essar Steel Ltd. v. United States, 678 F.3d 1268, 1272 (Fed. Cir. 2012)
(citing 19 U.S.C. § 1677(5)).
A party benefits from the contribution when “taxes or import charges paid by a
firm as a result of the program are less than the taxes the firm would have paid in the
absence of the program.” 19 C.F.R. § 351.510(a)(1). Thus, in order to measure the
value of the financial contribution, Commerce must calculate the taxes the firm would
have paid absent the countervailable program. See Royal Thai Gov’t v. United States,
32 CIT 97, 100, 534 F. Supp. 2d 1373, 1377 (2008) (“Royal Thai V”), aff’d sub nom.
Royal Thai Gov’t v. U.S. Steel Corp., 312 F. App’x 342 (Fed. Cir. 2009). In furtherance
of this inquiry, “Commerce must establish a benefit calculation benchmark, or more
precisely, determine what tariff rate would have applied absent the alleged subsidy.
Once this benchmark is established, Commerce will have a reference point from which
it can determine the amount of benefit that has been conferred.” Id. It is Commerce’s
selection of a benchmark that is at issue here.
II. Factual and Procedural History
On June 22, 2017, Commerce initiated a countervailing duty investigation into
citric acid and certain citric salts from Thailand. See Citric Acid and Certain Citrate
Salts From Thailand, 82 Fed. Reg. 29,836 (Dep’t Commerce June 30, 2017) (initiation
of countervailing duty investigation). The period of investigation was January 1, 2016,
through December 31, 2016. Id. at 29,837.
Court No. 18-00160 Page 5
Commerce selected COFCO, Niran, and Sunshine as mandatory respondents in
the investigation and issued them questionnaires. Selection of Respondents for the
Countervailing Duty Investigation on Citric Acid and Certain Citrate Salts from Thailand
(July 21, 2017) at 1, CR 11, PR 38, CJA Tab 3, PJA Tab 3; I&D Mem. at 2-3.
Commerce also issued a questionnaire to the Royal Thai Government (“the RTG”). I&D
Mem. at 2. Respondents reported receiving zero benefit for duty-exemptions applied to
the machinery because, absent IPA Section 28 eligibility, the machinery would have
been eligible for duty-free treatment pursuant to the ASEAN-China FTA. See Royal
Thai Gov’t, CVD Questionnaire Resp. (Sept. 8, 2017) (“RTG QR”) at 10, CR 55, PR 90,
CJA Tab 7, PJA Tab 7; Sunshine Biotech Int’l Co., Ltd. CVD Questionnaire Resp. (Sept.
8, 2017) (“Sunshine QR”) at 9, CR 15, PR 81, CJA Tab 4, PJA Tab 4; Initial
Questionnaire Resp. (Sept. 8, 2017) (“COFCO QR”) at 9, CR 44, PR 88, CJA Tab 5,
PJA Tab 5; Initial Questionnaire Resp. (Sept. 8, 2017) (“Niran QR”) at 10, CR 49, PR
89, CJA Tab 6, PJA Tab 6.
The ASEAN-China FTA is a free trade agreement among the ten nations of the
Association of Southeast Asian Nations and China that establishes a free trade area
between its members. See Pet’rs’ Rebuttal Factual Information Submission Regarding
the 9/8/17 Initial Questionnaire Resps. (Sept. 22, 2017) (“Archer Daniels’ Rebuttal
Submission”) Ex. 1 at 275, CR 102, PR 131, CJA Tab 8, PJA Tab 8 (listing the ASEAN-
China FTA member states). This multilateral trade agreement, among other things,
exempts equipment and machinery imported into Thailand from China from ordinary
Thai import duties. I&D Memo. at 18; see also RTG QR at 10. The ASEAN-China FTA
Court No. 18-00160 Page 6
contains rules of origin that prescribe varying requirements depending on the type of
good. See Archer Daniels’ Rebuttal Submission, Ex. 1 at 261-272. Thai companies
may claim ASEAN-China FTA treatment by producing a certificate of origin issued
pursuant to the ASEAN-China FTA, which demonstrates that the goods originated in a
member country (i.e., China). See id., Ex. 1 at 265, 267-69. However, the issuance of
a certificate of origin does not necessarily confer ASEAN-China FTA preferential tariff
treatment on those imports, which remain subject to verification procedures
implemented by the importing member. See id., Ex. 1 at 270-272 (ASEAN-China FTA
Rules 16, 19 and 21).
On November 3, 2017, Commerce preliminarily determined that certain Thai
producers of citric acid were not receiving countervailable subsidies. See Citric Acid
and Certain Citrate Salts From Thailand, 82 Fed. Reg. 51,216 (Dep’t of Commerce Nov.
3, 2017) (prelim. negative countervailing duty determination, prelim. negative critical
circumstances determination and alignment of final determination with final antidumping
duty determination); Decision Mem. for the Prelim. Negative Countervailing Duty
Determination, Prelim. Negative Critical Circumstances Determination and Alignment of
Final Determination with Final Antidumping Duty Determination (Oct. 30, 2017) (“Prelim.
Mem.”) at 1, PR 172, CJA Tab 10, PJA Tab 10. While Commerce found that IPA
Section 28’s duty exemptions, as applied to Respondents’ imported Chinese machinery,
“constitute[d] a financial contribution in the form of revenue foregone,” Commerce
further found that “such duty-free imports [did] not confer a benefit” because the duty
rates on the machinery “would have been zero” absent Respondents’ participation in the
Court No. 18-00160 Page 7
IPA Section 28 program. Prelim. Mem. at 11. Commerce based its finding on evidence
indicating that the machinery would have alternatively qualified for duty-free treatment
pursuant to the ASEAN-China FTA. Id. Although Commerce countervailed other IPA
Section 28 duty-exemptions conferred upon Respondents’ non-ASEAN-China FTA
eligible machinery and equipment, Respondents’ preliminary subsidy rates were de
minimis. See id. at 11, 13.
In November and December of 2017, Commerce conducted verification of
Respondents’ questionnaire responses. See Verification of the Questionnaire Resps. of
Sunshine Biotech Int’l Co., Ltd. (Jan. 19. 2018) at 1, CR 202, PR 228, CJA Tab 17, PJA
Tab 17 (“Sunshine Verification Report”); Verification of the Questionnaire Resps. Of
Niran (Thailand) Co., Ltd. (Jan. 18. 2018) at 1, CR 201, PR 227, CJA Tab 16, PJA Tab
16 (“Niran Verification Report”); Verification of the Questionnaire Resps. of COFCO
Biochemical (Thailand) Co., Ltd. (Jan. 18. 2018) at 1, CR 200, PR 226, CJA Tab 15,
PJA Tab 15 (“COFCO Verification Report”). Commerce found no evidence during
verification to undermine its preliminary determination to use the ASEAN-China FTA
tariff rate as the benchmark for determining the benefit conferred by the IPA Section
28’s duty-free treatment of Respondents’ machinery imported from China. See I&D
Mem. at 18 & n.89; Sunshine Verification Report at 6; Niran Verification Report at 7-8;
COFCO Verification Report at 7-8.
On June 5, 2018, Commerce published its final determination. Final
Determination, 83 Fed. Reg. at 26,004. Commerce’s determination remained
Court No. 18-00160 Page 8
unchanged with respect to the agency’s use of the ASEAN-China FTA as the
benchmark tariff rate. See I&D Mem. at 18. Commerce explained:
[Respondents] have demonstrated, by means of import documentation
verified by Commerce, that the imports in question were, in fact, Chinese
origin and that, accordingly, the duty payable on the machinery and
equipment in question would have been zero absent eligibility under
Section 28 IPA program. Thus, based on the record, as verified, we find
that had [Respondents] entered the machinery and equipment in question
under the ASEAN-China FTA and submitted the requisite forms to
demonstrate Chinese origin under that arrangement instead of under the
Section 28 IPA program, the duty rates applied would have been zero.
Accordingly, the amount of duty paid pursuant to the Section 28 IPA
program and the amount of duty [R]espondents would have paid on the
Chinese-origin machinery and equipment absent the Section 28 IPA
program are the same. Thus, there is no countervailable benefit for this
program for the imports of Chinese-origin and machinery.
Id. (footnotes omitted); see also id. at 18 n.89 (discussing verification).
Commerce rejected Archer Daniels’ argument that Respondents would not have
qualified for preferential tariff treatment pursuant to the ASEAN-China FTA “because
they failed to submit an application under that program,” concluding that the argument
lacked legal authority. Id. at 18. Commerce reasoned that submitting an application
would have required Respondents “to enter the same Chinese-origin goods under both
the ASEAN-China FTA and the Section 28 IPA program for Commerce to determine
whether a benefit existed under the program,” and there was “no support for [that]
approach in [Commerce’s] regulations or practice.” Id. Because Respondents
continued to receive only nominal benefits for their respective non-ASEAN China FTA
eligible imports, Commerce calculated zero or de minimis final countervailable subsidy
rates for each respondent. Final Determination, 83 Fed. Reg. at 26,006; I&D Mem. at
Court No. 18-00160 Page 9
12. 3 Accordingly, Commerce issued a negative final determination and terminated the
investigation. See Final Determination, 83 Fed. Reg. at 26,005-06. On July 5, 2018,
Archer Daniels timely commenced this action. See Summons, ECF No. 1. Plaintiff
moved for oral argument and the court, after reviewing the Parties briefs filed pursuant
to USCIT Rule 56.2, denied the request for oral argument as unnecessary.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to § 516A(a)(2)(B)(ii) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(a)(2)(B)(ii) (2012), 4 and 28 U.S.C. § 1581(c). 5 The
court will uphold an agency determination that is supported by substantial evidence and
otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial evidence
is ‘such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
(Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
3 COFCO and Niran received final countervailable subsidy rates of zero percent, and
Sunshine received a de minimis final countervailable subsidy rate of 0.21 percent. Final
Determination, 83 Fed. Reg. at 26,006; I&D Mem. at 12.
4 All further citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S.
Code, 2012 edition, and all references to the United States Code are to the 2012
edition, unless otherwise stated.
5 To establish standing under Article III of the U.S. Constitution, a plaintiff must show,
inter alia, that its injury “is likely to be redressed by a favorable decision.” Hollingsworth
v. Perry, 570 U.S. 693, 704 (2013) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555,
560–561 (1992)). Archer Daniels’ complaint minimally addresses redressability. While
Archer Daniels’ requests a “remand . . . for reconsideration consistent with the [c]ourt’s
opinion,” Compl. ¶ 18, ECF No. 11, in its briefs, Archer Daniels avers that Commerce’s
use of a benchmark other than the ASEAN-China FTA would result in an above-de
minimis subsidy rate and the issuance of a CVD order. See Pls.’ Br. at 10; Confidential
Pls.’ Reply Br. (“Pls.’ Reply”), at 3-4, ECF No. 26. In the future, it would be more
appropriate to include such jurisdictional allegations in the complaint.
Court No. 18-00160 Page 10
DISCUSSION
I. Parties’ Contentions
Archer Daniels argues that “the record does not support Commerce’s claim that
the reported entries would have alternatively qualified for the zero-rate tariff under the
ASEAN-China FTA at the time of entry.” Pls.’ Br. at 19 (internal quotation marks
omitted). Pointing to the procedural requirements underlying the issuance of the
certificate of origin pursuant to the ASEAN-China FTA, Archer Daniels argues that there
“is no evidence on the record indicating that any of Respondents’ imports complied with
these requirements.” Id. at 14. Without this evidence, Archer Daniels contends,
Commerce could not reasonably determine that the machinery would have been eligible
for preferential ASEAN-China FTA treatment. Id. at 14; see also id. at 23-24.
The Government contends that substantial record evidence—including
submissions by all Respondents that “provided a detailed, itemized listing of all
equipment originating from China along with the duty rates they would have received on
the items even absent the IPA Section 28 Program” and statements from the RTG and
Respondents that the machinery was of Chinese origin—supports Commerce’s
determination. See Def.’s Resp. at 7. The Government also contends that evidence
adduced at verification further supports the agency’s determination. Id. at 11-12
(explaining that Commerce “spot-checked the information at verification, examined the
pre-selected observations and additional observations randomly selected on site, and
confirmed its determinations”). According to the Government, Archer Daniels has failed
“to identify a single document that suggests that the country of origin might differ from
Court No. 18-00160 Page 11
what the weight of record documents show,” i.e., China. Id. at 8. Additionally, the
Government contends, Archer Daniels’ “position makes no sense” because it infers that
“[R]espondents (for no practical reason) should have taken the added step of meeting
every procedural element for origination outlined in the ASEAN-China FTA even though
they agree that respondents had no obligation or reason to specifically apply for the
program.” Id. at 10. 6
II. Commerce’s Determination is Sustained
The parties dispute whether it was reasonable for Commerce to select the
ASEAN-China FTA duty-free rate as the benchmark against which to measure whether
Respondents received a countervailable benefit for imports of machinery through the
IPA Section 28 program. Archer Daniels argues that the ASEAN-China FTA is an
inappropriate benchmark because the record does not indicate that Respondents
complied with—or could have complied with—the trade agreement’s requirements. See
Pls.’ Br. at 2, 13-17. Archer Daniels’ arguments lack merit.
As Commerce explained, there is no support in its regulations or practice for
requiring evidence of parallel compliance with ASEAN-China FTA procedural
requirements as part of its identification of a suitable benchmark, I&D Mem. at 18, and
6 The Government cites to Commerce’s determination in a separate proceeding to
support this assertion. Def.’s Resp. at 10 (citing, inter alia, Issues and Decision Mem.
for the Final Results in the Countervailing Duty Admin. Review of Certain New
Pneumatic Off-the-Road Tires from the People’s Republic of China; 2014 (“Pneumatic
Tires Mem.”) at 20); see also Letter from Patrick J. Togni, King & Spalding LLP, to the
Court (July 26, 2019), ECF No. 38 (copy of Pneumatic Tires Mem.). That reference is
not persuasive because it merely contains conclusions concerning the uncontested
applicability of the ASEAN-China FTA. See Pneumatic Tires Mem. at 20.
Court No. 18-00160 Page 12
Archer Daniels does not point to any. 7 The record reflects that Commerce reviewed
import documentation in order to assess the applicability of the ASEAN-China FTA.
Commerce is afforded latitude in determining whether the requirements of
countervailability have been met. Cf. Royal Thai Gov’t v. United States, 436 F.3d 1330,
1336 (Fed. Cir. 2006) (Commerce reasonably declined to engage in a transaction-by-
transaction review of an allegedly countervailable loan program because the agency
reasonably determined that the collection of the “necessary information to engage in the
extensive calculations contemplated by [the petitioner] was impracticable”). While
Archer Daniels is correct that the country of export may not be determinative of the
country of origin, Pls.’ Br. at 23, Archer Daniels has not identified any record evidence
demonstrating that Commerce’s assumption, based on its review of record evidence
and additional documentation at verification, was unreasonable. Commerce’s finding is
supported by substantial evidence of the machinery’s Chinese origin and Archer Daniels
has failed to identify evidence that fairly detracts from that conclusion. See I&D Mem. at
18 & n.89 (citations omitted). 8
7 For this reason, Archer Daniels’ argument that Commerce failed to consider the
degree to which each piece of machinery imported by Respondents individually
complied with the ASEAN-China FTA requirements is unpersuasive. See Pls.’ Br. at 16;
Pls.’ Reply at 9 (contending that duty-free treatment pursuant to the ASEAN-China FTA
is not automatic, and that every article must qualify in its own right).
8 Archer Daniels avers that Commerce’s determination is undermined by Niran’s
verification outline, which stated that, “[f]or purchases of machinery that Niran reported
duty free under non-[Thai Board of Investment (“BOI”)] related exemptions (such as the
ASEAN-China Agreement) or on imports of machinery that Niran reported it did not
receive an exemption, be prepared to demonstrate the accuracy of this information with
supporting documentation.” Pls.’ Reply at 13-14 (quoting Niran Verification Report at 8)
(asserting that the record lacks the requested evidence). However, at issue here are
Court No. 18-00160 Page 13
The case law upon which Archer Daniels relies is unpersuasive. Archer Daniels
argues that several decisions of this court confirm that origin statements on customs
documentation does not confer country of origin for purposes of free trade agreements,
including the ASEAN-China FTA. See Pl’s Br. at 17-20. Archer Daniels cites three
cases in support of this proposition, each of which is inapposite. See id. (citing Polly
U.S.A., Inc. v. United States, 33 CIT 1051, 637 F. Supp. 2d 1226 (2009); United States
v. Univar USA Inc., 42 CIT ___, 355 F. Supp. 3d 1225 (2018); Int’l Fid. Ins. Co. v.
United States, 41 CIT ___, ___, 227 F. Supp. 3d 1353, 1354 (2017)).
Two of the three cases concern the domestic enforcement of free trade
agreements codified by Congress implicating statutory origin verification obligations.
See Polly, 33 CIT at 1053-54, 637 F. Supp. 2d at 1229; Int’l Fid., 227 F. Supp. 3d at
1371-72. Polly and International Fidelity concern the domestic statutory and regulatory
requirements necessary to establish the country of origin when foreign merchandise
enters the United States and the importer claims preferential duty treatment pursuant to
the North American Free Trade Agreement or the African Growth and Opportunity Act.
See Polly, 33 CIT at 1053-54, 637 F. Supp. 2d at 1229; Int’l Fid., 227 F. Supp. 3d at
1371-72. Here, there are no statutory or regulatory mandates that require Commerce to
adopt a specific methodology when evaluating a foreign free trade agreement for
Respondents’ machinery imports reported duty free pursuant to BOI-related (i.e., IPA
Section 28) exemptions, not non-BOI related exemptions. While Respondents reported
ASEAN-China FTA eligibility, see Sunshine QR at 9; COFCO QR at 9; Niran QR at 10,
Respondents did not report duty-free treatment under the ASEAN-China FTA. Thus,
Archer Daniels’ argument is unpersuasive.
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purposes of identifying a benchmark tariff rate. Univar, a case involving the collection of
allegedly unpaid duties and penalties pursuant to 19 U.S.C. § 1592, is further afield.
There, the court confined its discussion of certificates of origin to its analysis of
corresponding evidentiary disputes in the context of the underlying transshipment
allegation. See Univar, 355 F. Supp. 3d at 1262-63.
Archer Daniels also relies on Royal Thai V to support the proposition that
Commerce does not engage in speculation when selecting a benchmark. Pls.’ Br. at
20-21 (citing Royal Thai V, 32 CIT at 97, 534 F. Supp. 2d at 1373). Royal Thai V
affirmed Commerce’s decision declining to find “countervailability because it lacked
information regarding applicable alternative tariff rates.” Royal Thai V, 32 CIT at 101-
02, 534 F. Supp. 2d at 1378-79. Here, however, Commerce relied on record
evidence—not speculation—to support its selection of the ASEAN-China FTA. See I&D
Mem. at 18-19 (reviewing unrebutted record evidence concerning Chinese origin and
determining that the machinery would have otherwise qualified for duty-free treatment
pursuant to the ASEAN-China FTA).
Lastly, Archer Daniels relies on Government of Sri Lanka v. United States, 42
CIT ___, 308 F. Supp. 3d 1373 (2018), to support the proposition that Respondents’
duty-exemptions are countervailable because Commerce failed to adduce evidence that
the ASEAN-China FTA “nullified” any alleged benefit Respondents received from the
IPA Section 28 Program. Pls.’ Reply at 14-15. Archer Daniels misapplies Government
of Sri Lanka, which concerns the partial nullification of a countervailable benefit by the
imposition of a one-time “Super Gains Tax,” and does not otherwise address
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Commerce’s selection of Sri Lanka’s standard corporate income tax rate as the
benchmark income tax rate. See Gov’t of Sri Lanka, 308 F. Supp. 3d at 1377-79. 9
In sum, Archer Daniels would have Commerce base a countervailing duty order
on nothing more than Respondents’ failure to comply with paperwork requirements
necessary to qualify for a duty-free treatment program that would have permitted them
to import the machinery at the same duty-free rate as the program in question. Archer
Daniels has failed to identify any legal authority or record evidence suggesting that
Commerce’s refusal was unreasonable. Commerce’s decision to use the ASEAN-China
FTA tariff rate as the benchmark tariff rate is supported by substantial evidence and is
otherwise in accordance with law.
9 Archer Daniels argues that Commerce’s benefit calculation is “inconsistent with the
CVD Preamble” and the agency’s finding that IPA Section 28 duty exemptions are
contingent on export performance. Pls.’ Br. at 22 (citing Countervailing Duties, 63 Fed.
Reg. 65,348 (Nov. 25, 1998) (final rule)); see also I&D Mem. at 11 (concluding that IPA
Section 28 duty exemptions were “specific” when conditioned on export performance).
Archer Daniels suggests that Commerce found some portion of Respondents’ benefits
“related solely to ‘non-export-related criteria’” and did not include the program in its
benefit calculation for that reason. Pls.’ Br. at 22-23. Archer Daniels offers no support
for this assertion. The export contingency of the program is relevant to specificity rather
than benefit. I&D Mem. at 11. Commerce excluded IPA Section 28-related duty
exemptions respecting Respondents’ machinery from its benefit calculations because
the alternative tariff rate pursuant to the ASEAN-China FTA would have been zero. I&D
Mem. at 18-19.
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CONCLUSION
For the foregoing reasons, the court sustains Commerce’s Final Determination.
Archer Daniels’ motion for judgment on the agency record is denied. Judgment will be
entered accordingly.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated: August 2, 2019
New York, New York