Commerce Erred in Anti-Circumvention Inquiry Into CORE From China, Exporter Tells Federal Circuit

"In failing to address record evidence concerning the degree of AGIS’s UAE production operations, the significance of the value added in the UAE for sales to the United States, and substantial patterns of trade that indicated an absence of circumvention, Commerce reached a final determination of circumvention that was not supported by substantial evidence and otherwise not in accordance with law," AGIS said.

The Court of International Trade upheld the circumvention ruling in October 2021 (see 2110050065). In the inquiry, Commerce said that AGIS's level of investment and production facilities in the UAE are minor and that the value of processing in its UAE plant represents only a small portion of the value of its merchandise shipped to the U.S. AGIS challenged these positions along with Commerce's contention that AGIS bought Chinese hot-rolled steel and cold-rolled steel substrate.

AGIS appealed to the Federal Circuit. The UAE company said in its opening brief that the record shows that its facility in the UAE is "large" and "sophisticated" and the product of "significant investment." In the brief, AGIS detailed the investment it made in its facility along with all of the processes the facility houses, in a bid to show the court that the company does not merely finish CORE products but actually manufactures the good.

In the investigation, Commerce compared AGIS's investment in its facilities with the average expenditure for the construction of integrated HRS mills in China. The UAE company argued that is "not an appropriate comparison." There is no evidence that the level of investment required for the large Chinese integrated HRS mills reflects the investment needed for Chinese CORE producers, AGIS said. At CIT, Judge Timothy Reif said that since the statute doesn't outline a specific methodology to find the significance of the investment or production facilities in the country suspected of circumvention, such a comparison was allowed.

AGIS told the Federal Circuit that Commerce has previously indicated that the "proper approach" involves comparing the level of investment for the processing of merchandise in a third country to the investment required to make the merchandise under consideration. That is, comparing AGIS's investments to a Chinese CORE producers. "Instead, Commerce compared the investments related to AGIS’s production of CORE to the investment required to produce completely different upstream steel inputs," the brief said. In addition, courts have "found that 'it is reasonable to compare the level of investment required at different processing stages within the same industry.'"

Commerce further erred in its consideration of the value added to the company's U.S. exports in the UAE and the company's shipping patterns in response to the AD/CVD orders, AGIS said. In fact, the agency failed to prove its conclusion that the value added in the UAE was small and insignificant, disregarding the actual value for AGIS's U.S. sales of CORE made with Chinese inputs, the brief said. The company also said that its trade patterns did not see an eyebrow-raising jump after the imposition of the AD/CVD orders.

"AGIS’s increases in shipment volumes began long before the China CORE Orders and reflected the continued natural upward progression of a growing company," the brief said. "Moreover, AGIS’s semi-annual HRS and CRS material purchases from China declined in absolute terms over the final three years of the period examined, and also declined in terms of the percentage of the company’s overall steel inputs."