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TABLE OF CONTENTS I. INTRODUCTION II. ARE THE REINS ON AFA TIGHTENING? A. Application of AFA--Is One Failure Grounds for Invalidating Everything? B. Lawfulness of the Selected AFA Rate--The Sky Is Not the Limit III. THE GPX CASES--CAN COMMERCE HAVE ITS CAKE AND EAT IT TOO? A. GPX Appeal Background B. GPX Initial Decision C. Commerce's First Remand Decision and Second CIT Decision D. Commerce's Second Remand Decision and Final CIT Decision IV. DO TWOMBLY AND IQBAL MATTER? V. CONCLUSION
The U.S. Court of International Trade (CIT) in New York is an Article III court with the powers in law and equity of a federal district court, (1) but with a specialized docket limited to claims relating to federal international trade law and administration. (2) Most prevalent among the cases falling within the court's jurisdiction are claims against the United States contesting the denial of a protest by U.S. Customs and Border Protection (CBP) (so-called "(a)" jurisdiction claims, by reference to the relevant statutory subsection), (3) claims challenging determinations by the U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (ITC) in antidumping duty and countervailing duty proceedings ("(c)" jurisdiction claims), (4) and "residual jurisdiction" claims that are not otherwise specified in the jurisdictional statute, but "arise" from federal laws relating to international trade that are within the CIT's jurisdiction ("(i)" jurisdiction). (5) In addition to claims against the United States, claims by the United States for collection of duties, penalties, and liquidated damages also fall within the CIT's jurisdiction and are occasionally brought before the tribunal. (6)
During 2010, the CIT issued 142 opinions. This makes 2010 a relatively light year for CIT opinions, (7) a result that may not be surprising in light of the depressed economic circumstances during most of the last three years. The opinions issued in 2010 also reflect an ordinary range of subject matter. As in the past, the overwhelming majority of the opinions (83 in total) adjudicated "(c)" claims contesting antidumping and countervailing duty determinations or matters and a majority of the residual "(i)" jurisdiction cases also involved claims relating to the administration of antidumping and countervailing duty matters such as the timing and content of liquidation instructions issued by Commerce. (8) A relatively smaller, but by no means insignificant, share of the cases (28 in total) involved "(a)" claims contesting the denial of protests. (9) However, even these "(a)" cases in several instances involved claims relating to liquidations involving antidumping or countervailing duties. (10) Only seven opinions issued in 2010 involved claims by the United States seeking to collect duties, penalties and liquidated damages. (11)
Thus, the CIT docket in 2010 remains overwhelmingly dominated by appeals contesting the issuance and administration of trade remedies. What have the issues been within this area? For the most part, they are familiar types of claims--challenges of principally case-specific relevance, such as the selection of "surrogate values" (12) and standards for classifying inputs as "direct" or "indirect" material (13) in non-market economy (NME) antidumping cases, the calculation of indirect selling expense adjustments, (14) or the lawfulness of a decision to rescind an antidumping duty new shipper review based on a finding that an export sale is not "bona fide." (15) Other opinions have addressed calculation methodologies of broader application in antidumping or countervailing duty proceedings, such as the proper basis for determining the recovery of costs, (16) the use of "zeroing" in the margin calculation, (17) the lawfulness of the test employed by Commerce to identify "targeted dumping," (18) Commerce's authority to correct calculation errors after a final determination is issued, (19) whether Commerce has the authority to reinstate a respondent under an antidumping order pursuant to a "changed circumstances review," (20) whether Commerce in NME cases can lawfully subject companies without separate rate to the "China-wide" margin when at least one named exporter fails to qualify for separate rate, (21) and whether Commerce is required to conduct a circumvention inquiry in the context of an administrative review. (22)
Still other opinions issued in 2010 concerning trade remedy matters address issues of administrative and judicial procedure, such as whether redeterminations made pursuant to the implementation of adverse WTO rulings under Section 129 of the Uruguay Round Agreements Act (URAA) (23) can be applied retroactively, (24) under what circumstances Commerce can properly reject information submitted by respondents to correct data previously submitted, (25) whether a plaintiff can challenge Commerce's fifteen-day liquidation policy even though its entries are already enjoined from liquidation pursuant to a preliminary injunction, (26) and whether a party can intervene in an appeal of an ITC injury determination where it produced merchandise from one of the countries under investigation, but not from the country for which the appeal was specifically filed. (27)
Each of these cases, particularly those involving methodologies and practices of general application, such as the methodologies for "targeted dumping" and "cost recovery," are important and worthy of further explication. However, for purposes of this article, we have chosen two areas of law that are of particular systemic importance for practitioners in the trade remedies area. In particular, we focus in Part II on a series of opinions from the CIT that have been issued in the area of application and selection of "facts available" in antidumping proceedings. As discussed below, these cases have been issued in the wake of recent United States Court of Appeals for the Federal Circuit (Federal Circuit) rulings that suggest that Commerce determinations, particularly in the selection of "adverse facts available" (AFA) are coming under tighter scrutiny than in the past.
In Part III, we discuss in greater detail the series of CIT decisions in GPX International Tire Corp. v. United States addressing the legality of Commerce's policy to apply countervailing duty (CVD) law to the People's Republic of China (PRC) while simultaneously treating China as a non-market economy for purposes of antidumping duty (AD) proceedings. This case, which is currently on appeal before the Federal Circuit, will undoubtedly have a significant and lasting impact on the growing number of CVD investigations targeting imports from the People's Republic of China and other NME countries.
Finally, we briefly assess the impact, or lack thereof, on the CIT's jurisprudence as a result of the Supreme Court's rulings in Bell Atlantic Corp. v. Twombly (28) and Ashcroft v. Iqbal. (29)
II. ARE THE REINS ON AFA TIGHTENING?
A review of opinions issued in 2010 suggest that the CIT, with the encouragement of the Federal Circuit, is at long last tightening disciplines on Commerce's application of adverse facts available in AD and CVD investigations and reviews. If these recent opinions are evidence of a true shift in judicial policy toward a tightening of constraints in this area, this is indeed a welcome development as previous laxity by the courts has possibly encouraged increasing abuse of the AFA authority by Commerce, particularly as applied to Chinese respondents. (30)
Adverse facts available--often abbreviated as AFA--actually encompasses two distinct findings by Commerce. First, if necessary information is not available on the record, or if a party or other person withholds requested information, fails to provide information by deadlines in the proper form, significantly impedes a proceeding, or provides information that cannot be verified, Commerce may "use the facts otherwise available" in reaching its determination. (31) Second, Commerce may use an inference that is adverse to the interests of a party that it finds has failed to cooperate by not acting to the best of its ability to comply with a request for information. (32) The combination of facts otherwise available and an adverse inference is referred to as AFA.
Commerce issued numerous decisions in 2010 that will likely make it harder for Commerce to apply AFA in the future. In addition, when Commerce, in applying facts otherwise available, relies on secondary information rather than on information obtained in the current proceeding, Commerce must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. (33) Furthermore, the application of AFA is intended to induce cooperation and may not be used as a punishment. (34) In the wake of the Federal Circuit's decision in Gallant Ocean, the CIT also stiffened its resistance to AFA rates relying on secondary information without proper corroboration and, more importantly, unusually high AFA rates that are potentially divorced from actual margins and, therefore, punitive. Cases in each of these areas are discussed below. (35)
A. Application of AFA--Is One Failure Grounds for Invalidating Everything?
In 2010, the CIT emphasized that AFA can be applied only where deficiencies in the record exist, and only where the relevant party was found not to have acted to the best of its ability. In Since Hardware (Guangzhou) Co. v. United States, (36) the plaintiff challenged the application of AFA in an administrative review of the antidumping order on floor standing metal-top ironing tables from China. In non-market economy cases, when determining normal value on the basis of the factors of production used in producing subject merchandise, Commerce normally uses information and data from a surrogate market economy country to value the inputs. (37) However, if a respondent purchases inputs from a market economy country at the market economy purchase price, Commerce uses the reported purchase prices to value inputs. The plaintiff thus submitted to Commerce information regarding its manufacturing inputs from claimed purchases from market economy sources. (38)
In addition, in non-market economy cases, Commerce presumes that exporters …