United States: US Federal Circuit Rules For Inclusion Of Voluntary Respondents’ CVD Rates In Calculation Of "All Others" Duty Rate

Keywords: CAFC, CIT, countervailing duty investigations, CVD rates, exporters

The US Court of Appeals for the Federal Circuit (CAFC) has reversed a US Court of International Trade (CIT) decision on the calculation of the "All Others" duty rate in countervailing duty (CVD) Investigations. Specifically, the CAFC ruled that the duty margins assigned to the exporters that volunteered for a CVD investigation (voluntary respondents) should be included in the tallying of the All Others duty rate for those not individually examined in the investigation.

The US CVD statute authorizes the US Department of Commerce (Commerce) to select a sample of exporters (mandatory respondents) for individual investigation when it is conducting a CVD investigation of a particular product in a market involving a large number of exporters. Exporters that are not initially selected for investigation but wish to participate, and are accepted by Commerce, (voluntary respondents) may supply the necessary information to Commerce for calculation of individual CVD rates. "All Others" are those exporters not examined as mandatory respondents or voluntary respondents.

Mandatory respondents that cooperate with Commerce's investigation are given CVD rates particular to their individual circumstances. When mandatory respondents fail to cooperate to the best of their ability, they are given rates determined from adverse facts available (AFA).¹

Generally, the All Others duty rate is an amount equal to the weighted-average of the countervailable subsidy rates established for exporters individually investigated. If the established rates are zero or de minimis (less than 2 percent), or are determined on the basis of AFA, Commerce may use "any reasonable method" to establish an All Others rate for those not individually investigated.²

The underlying case involved a CVD investigation of aluminum extrusions from the People's Republic of China, where the three mandatory respondents that refused to cooperate with Commerce were given an AFA rate of 374.15 percent, while the two voluntary respondents were awarded individual rates that reflected their own particular circumstances after individual investigations. After excluding the AFA rate and the voluntary respondents' rates, Commerce invoked the "reasonable method" clause and imposed the 374.15 percent rate on all other exporters and producers. Two US importers of Chinese aluminum extrusions, Evergreen Solar Inc. and Eagle Metal Distributors Inc., challenged Commerce's calculation of the All Others rate. They claimed that Commerce ignored its general calculation rule by discarding the voluntary CVD rates because the rule requires it to take the weighted-average of all exporters "individually investigated."

After several rounds of CIT litigation, Commerce reduced the All Others CVD rate to 137.65 percent by subtracting the contributions of subsidy programs specific to the voluntary respondents from the 374.15 percent rate. Evergreen and Eagle appealed to the CAFC and argued that the two voluntary respondents received rates particular to their circumstances after individual investigations and that the CVD statute unambiguously provides for inclusion of such rates in the calculation of the All Others rate.

The CAFC agreed that the statute unambiguously requires that the rates of any individually investigated exporter or producer be included in the calculation of the All Others rate under the general rule and reversed the CIT's decision.³ Indeed, the CAFC found no possible doubt that a voluntary respondent that receives its individual rate has undergone an "individual investigation" in the context of the CVD statute. The CAFC also found CIT's reasoning to lack support because, although the CVD statute does not define the term "individually investigated" or provide for inclusion of the rates of "all" exporters and producers individually investigated when calculating the All Others rate, Congress intended all such rates to be factored into the calculation when the statute specifies its own exclusions.⁴ In addition, the fact that the rates determined for mandatory respondents shall be used in calculating the All Others rate does not suggest that voluntary respondents' rates must be excluded from the calculation.

The CAFC's decision reversed Commerce's long-standing practice that excludes the voluntary respondents' CVD rates from the calculation of the All Others duty rate. Voluntary respondents in trade remedy proceedings are not particularly common, as Commerce has always been reluctant to exert its discretionary authority to accept voluntary respondents. However, as a general proposition, companies that request voluntary respondent status generally receive more favorable duty rates than the average company (which is why the exporter wanted to become a voluntary respondent in the first place). As such, this new development is a positive one for those companies that are part of the All Others CVD calculation. In addition, while this case only involved a CVD investigation, hopefully it will also be extended to antidumping cases as well.

Footnotes

1 19 U.S.C. § 1677e(b).

2 19 U.S.C. § 1671d(c)(5)(A)(ii).

3 MacLean-Fogg Co. v. United States, No. 2013–1187, 2014 WL 2459692, at *3 (Fed. Cir. June 3, 2014).

4 19 U.S.C. § 1671d(c)(5)(A)(i) (exclusions include situations where rates established after individual investigations are zero or de minimis rates, or are determined on the basis of AFA).

Originally published 12 June 2014

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