Commerce Ends AD Duty Review After Finding Domestic Companies Hid Collusion With Chinese Exporters
A group of Chinese garlic companies, a U.S. law firm and a group of small New Mexico farmers apparently worked in league to increase another Chinese exporter’s antidumping duty rate, the Commerce Department said in a memorandum issued in connection with its recently completed AD duty administrative review on garlic from China. Finding the law firm and the New Mexico farmers it represented made misstatements to hide their effort, Commerce in recent days ended its review of that exporter rather than assign it a high China-wide rate (see 1706140022).
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Harmoni had held onto a zero percent AD rate for years before the New Mexico Garlic Growers Coalition (NMGGC), comprising a pair of small garlic farmers, requested a review of the company. After Harmoni failed to respond to a questionnaire, Commerce in the preliminary results of the administrative review assigned it the $4.71/kg China-wide rate (see 1612120017). But after those preliminary results, evidence emerged that the NMGGC’s request for review was the fruit of years of work between the law firm Hume & Associates and several competing Chinese exporters to get Commerce to review Harmoni.
One factor in the effort coming to light was the decision of one of the two garlic farmers that made up the NMGGC to leave the coalition and become a whistleblower. The stated justification for the NMGGC’s case -- leveling the playing field for the New Mexican farms to compete – “inevitably came with a ‘wink, wink’ whenever we talked about it,” the whistleblower told Commerce.
But the reason for rescinding the review for Harmoni was not that the NMGGC was working with Chinese exporters. “We do not mean to suggest that it was the dual or conflicting motives of Mr. [Robert] Hume and the NMGGC, in and of themselves, that cause us to rescind the review of Harmoni. A legitimate domestic producer might have ties or affiliations with foreign companies, and this would not cause the domestic producer to lose its status as a domestic interested party,” Commerce said. Nor was the size of the New Mexico farmers relevant. “There is no minimum threshold of production activity to qualify a company as a domestic producer,” it said.
Instead, Commerce’s decision to rescind the review came after evidence showed misstatements by Hume & Associates and the NMGGC to such an extent that “the entirety of the NMGGC’s information, including its garlic production information, is unusable,” the agency said. “As such, there is no valid review request of Harmoni,” it said. Despite Hume's and the NMGGC’s statements to the contrary, communications between Hume and the Chinese exporters demonstrated that “Hume and Chinese garlic exporters, which were his clients or business partners (or both), have over a period of years, formulated a number of strategies with the ultimate goal that the Department review Harmoni,” Commerce said. “In the instant review, these efforts took the form of the NMGGC’s review request.” The NMGGC members also received payments from Hume & Associates, contrary to their assertions that they received no “direct or indirect compensation for their participation in this review,” Commerce said.
Commerce “found that not only Mr. [Stanley] Crawford, the only remaining member of the NMGGC, had provided false information, but also that his counsel, Robert T. Hume, had misrepresented critical information,” said Bruce Mitchell of Grunfeld Desiderio, who represented Harmoni in the administrative review. “This is an unusual rebuke of a trade lawyer by the Department of Commerce,” he said.
In a related case in Los Angeles U.S. District Court, Hume & Associates argues the reason Harmoni has been able to maintain its zero percent AD rate is because of its own collusion with U.S. garlic importers (see 1603100018). According to a filing last year, Harmoni’s zero percent AD rate allows one importer to act as a conduit for cheap garlic and expand U.S. market share. In order to guarantee its flow of low-priced garlic, U.S. producers and importers have withdrawn their request for review for Harmoni in every administrative review since Harmoni first got its zero AD rate in 2004.
Judgment is now expected in that court case, filed by Harmoni to allege racketeering violations in the form of collusion and misstatement to Commerce, “in the next week or so” in favor of Hume, the Chinese exporters and the New Mexico farmers, said their lawyer Tony Lanza of Lanza Smith. Some of the Chinese defendants, Hume & Associates lawyers and the New Mexico garlic farmers have already been dismissed from the case without prejudice, and have “thus been exonerated of all charges asserted by Harmoni in the LA Action,” Lanza said. Lanza expects Harmoni “will file an appeal shortly,” which is the “only way for the company to unwind this devastating loss in LA,” Lanza said. “We don’t see how this most recent Commerce Dept. ruling changes this.”
Email ITTNews@warren-news.com for a copy of the Commerce memorandum.