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Federal Circuit Upholds Separate Rate in AD Review Through Average of AFA, de Minimis

The Commerce Department can calculate the separate rate respondent's dumping margin by averaging an adverse facts available rate and a de minimis rate in an antidumping duty review, the U.S. Court of Appeals for the Federal Circuit said Jan. 10. Upholding the Court of International Trade's decision, the Federal Circuit said the separate rates in the past AD reviews trended upward, justifying the 41.025% dumping rate for the separate rate respondents.

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"The Diamond Sawblades Manufacturers' Coalition is very pleased with today's Federal Circuit decision," said Stephanie Bell, lead counsel for the ADD petitioner. "This decision confirms that Chinese exporters continue to dump at significant levels and highlights the crucial role of the dumping order to ensuring that domestic producers can compete on a level playing field."

The opinion concerns Commerce's 7th administrative review of the AD duty order on diamond sawblades from China. In the review, Commerce tapped Jiangsu Fengtai Single Entity and Chengdu Huifeng New Material as the mandatory respondents, handing them an AFA China-wide 82.05% rate and zero percent rate, respectively. To come up with the rate for the separate rate respondents, the agency averaged these two rates.

The plaintiffs, led by Bosun Tools, appealed to CIT. After an initial remand over Commerce's failure to consider evidence that showed the rate was not reasonably reflective of the separate rate respondent's dumping margins, the trade court eventually sustained the 41.025% rate. The court said such a rate was justified after Commerce showed that the separate rate respondents' dumping margins trended upward over the course of the administrative reviews.

The plaintiffs then took their case to the Federal Circuit, raising three issues. They argued that the rate wasn't reasonably reflective of their dumping margins because it was based on AFA and on data that isn't contemporaneous with the period of review, and it was inconsistent with historical dumping rates. Judges Alan Lourie, Todd Hughes and Tiffany Cunningham rejected the plaintiffs' arguments on all three fronts. The decision marks Cunningham's first opinion on a trade case.

The appellate court held that Commerce was authorized by the statute to rely on AFA when calculating the separate rate respondents' margin. "§ 1673d(c)(5)(B) provides that Commerce may factor an AFA rate into its calculation of a separate rate," the opinion said. "The [Statement of Administrative Action of the Uruguay Round Agreements Act] reinforces the statute. It provides that relying on an AFA rate is not only permitted, but expected."

Bosun further argued that Commerce was wrong to use Fengtai's 82.05% China-wide rate since it was a margin derived from a past administrative review. Again, the appellate court sided with the government, holding that the argument is "unpersuasive' and "foreclosed by statute," since Commerce can rely on an AFA rate when calculating the separate rate. "Second, under § 1677e(b)(2)(C), when determining an AFA rate, Commerce may rely on information from prior administrative reviews," the opinion said. "Taken together, the statutory framework allows Commerce, when calculating the separate rate, to rely on an AFA rate derived from a prior administrative review."

Lastly, the judges noted the upward trend of the separate rates in the AD reviews. All of Bosun's individually calculated rates were all above de minimis, starting at around 3%-4%, then jumping to 39.66% in the fifth administrative review, the court pointed out. Commerce also properly weighted the 39.66% rate most heavily, the opinion said, because it was the rate taken from the most recent review in which the separate rate was based on above-de minimis calculated rates.

"Although Bosun argues that Commerce’s 41.025% rate was unreasonable, its proposed alternative rate -- 0% -- was not realistic," the opinion said. "Indeed, Commerce rejected Bosun’s request for a 0% rate. Commerce emphasized that the 0% rate was inconsistent with Bosun’s individually calculated rates, which were all above de minimis."

(Bosun Tools Co. v. United States, Fed. Cir. #21-1929, dated 01/10/2022, Judges Lourie, Hughes and Cunningham. Attorneys: Gregory Menegaz of deKieffer & Horgan for plaintiff-appellant Bosun; Lizbeth Levinson of Fox Rothschild for plaintiffs-appellants; John Todor for defendant-appellee U.S. government; Stephanie Bell of Wiley Rein for defendant-appellee Diamond Sawblades Manufactures' Coalition)