Chinese Sawblade Importer Defends CAFC’s Ability to Hear Its Case

This new litigation represents an entirely different challenge that the appeals court has not yet heard, importer China Manufacturers Alliance said in a brief replying to the government's opening bid.

China Manufacturers, which brought its 2015 case to CIT to contest the Commerce Department’s determination that its affiliated exporter Double Coin was presumed to be under the Chinese government’s control, said it proceeded initially to the trade court with two main arguments: a legal argument, that Commerce couldn't apply adverse facts available to a cooperative respondent, and a factual one, that Commerce’s determination wasn't supported by substantial evidence.

CIT found for China Manufacturers on the basis of its legal argument, setting aside its factual claims. The trade court was then overruled by CAFC on appeal. Upon remand, CIT again found for Double Coin, this time on the factual argument, and the exporter and importer find themselves again before the appeals court as the U.S. argues their new case has already been heard and can’t be litigated again (see 2402080054).

However, when CAFC overruled CIT, it remanded the case “precisely because it correctly recognized there might well be remaining issues for the trial court to address in the first instance,” China Manufacturers said.

The trade court itself ruled on this point and rejected the government’s arguments, it said.

It also said that Commerce’s determination of government control was wrong.

The department misinterpreted the burden of evidence to presume government control of an exporter, the importer said. It said it itself had already placed proof on the record that Double Coin was not under Chinese influence. This meant that the presumption had been successfully rebutted, and the burden had shifted to Commerce to provide “substantial evidence” if it wanted to rule otherwise, it said.

But it said Commerce’s decision memo showed the department had incorrectly “relied heavily” on the rebuttable presumption, as the memo read: “‘[W]e continue to find that the factual record does not provide sufficient information to rebut the presumption of government control.” This indicated that Commerce decided Double Coin had not produced the ‘minimum quantum of evidence’ demonstrating a lack of government control” that would rebut such a presumption; but the exporter had, China Manufacturers said.

“Of course, after undertaking a proper examination of all of the evidence, Commerce might conclude that there was substantial evidence that Double Coin was not eligible for a separate rate,” it said. “But given the explicit statement in Commerce’s decision memorandum -- that it deemed the presumption to be unrebutted -- it does not appear that this is the approach that Commerce adopted.”

The department also applied a flawed analysis, the importer said. Commerce said it “generally” considers several factors, outlined in the department’s Policy Bulletin 05.1, to decide whether a respondent is subject to de facto government control, the importer said. Each factor, despite DOJ arguing otherwise, must be related to a foreign government’s control of a company’s export activities, it said.

“Numerous aspects” of the importer’s and exporter’s organizational structures prevent the Chinese government from influencing Double Coin’s export prices, China Manufacturers said.

“Notably, Commerce does not really dispute this point and instead simply ignores the text of its Policy Bulletin,” it said. “... It is not lawful for Commerce to adopt a policy, and then simply ignore its own policy.”