CAFC Confirms Exporter's AD Duty Rate Takes Precedence Over Producer's, Even if China-Wide
Importers of goods subject to antidumping duties from non-market economy countries like China and Vietnam must pay at the exporter’s rate, and not the producer’s, said the U.S. Court of Appeals for the Federal Circuit on Sept. 10 as it affirmed a lower court ruling. Contrary to the situation in market economy countries, where many exporters aren’t assigned a rate and importers can therefore enter merchandise at the producer’s rate, in NME countries all companies get a rate, even if it’s as part of the China- or Vietnam-wide entity. Because Commerce prefers exporter rates to producer rates, those China- or Vietnam-wide exporter rates must be used, said CAFC.
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The Court of International Trade had come to the same conclusion in August 2013 (see 13082201). Michaels Stores was challenging the assessment of duties on pencils it imported from China. Although the manufacturers of the pencils got AD rates ranging from 2.66% to 26.32%, CBP had assessed duties at the 114.9% China-wide rate applicable to the exporter.
Michaels pointed to Commerce’s regulations at 19 CFR 351.107(b)(2), which says importers can use the producer’s rate if no rate has been established for the exporter or for the producer-exporter combination. Because no specific rate had been set for the exporters of the pencils, Michaels argued it should have paid duties at the rates applicable for their suppliers. The government countered that, under that a regulation appearing shortly after, 19 CFR 107(d), the exporter’s China-wide status was in effect an established rate for that exporter. Because the exporter had a rate, Michaels had to pay it, Commerce said.
CAFC agreed that Michaels owed the higher China-wide rate applicable to the exporters. Commerce had valid policy goals when it wrote its regulations in a way that would require importers to use either a combination producer-exporter rate or the rate applicable to the exporter, it said. Had it written them differently, producers could maintain their low AD rates even while using a state-controlled exporter to dump their goods in the United States. Here, if Michaels did not have to pay at the exporter’s rate, it could “circumvent its antidumping obligations by buying pencils from a state-controlled exporter at a discounted price and then use the antidumping rate associated with its non-state controlled manufacturer,” said CAFC.
(Michaels Stores, Inc. v. U.S., Fed. Cir. 2014-1051, dated 09/10/14, Judges Clevenger, Chen and Prost)