Guangdong Wireking Housewares & Hardware Co. v. United States

900 F.Supp.2d 1362

GUANGDONG WIREKING HOUSEWARES & HARDWARE CO., LTD., Plaintiff,andBureau of Fair Trade for Imports & Exports, Ministry of Commerce, People's Republic of China, Plaintiff–Intervenor,

v. UNITED STATES, Defendant,andNashville Wire Products, et al., Defendant–Intervenors.

Slip Op. 13–31. Court No. 09–00422.

United States Court of International Trade.

March 12, 2013.

Curtis, Mallet–Prevost, Colt & Mosle LLP, (William H. Barringer, Daniel L. Porter, James P. Durling, Matthew P. McCullough, and Ross Bidlingmaier), Washington, DC, for Guangdong Wireking Housewares & Hardware Co., Ltd., Plaintiff, and for Bureau of Fair Trade for Imports & Exports, Ministry of Commerce, People's Republic of China, Plaintiff–Intervenor.

Stuart F. Delery, Principal Deputy Assistant Attorney General; Jeanne E. Davidson, Director, Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, (Alexander V. Sverdlov); Office of the Chief Counsel for Import Administration, United States Department of Commerce, Daniel J. Calhoun, Of Counsel, for the United States, Defendant.

Kelley Drye & Warren, LLP, (Kathleen W. Cannon, Paul C. Rosenthal, Brooke M. Ringel, and David C. Smith), Washington, DC, for Nashville Wire Products, Inc. and SSW Holdings Co., Inc., Defendant–Intervenors.

OPINION and ORDER

TSOUCALAS, Senior Judge:

Plaintiff Guangdong Wireking Housewares & Hardware Co., Ltd. (“GWK”) and plaintiff-intervenor Bureau of Fair Trade for Imports & Exports, Ministry of Commerce, People's Republic of China (collectively “Plaintiffs”) challenge several aspects of the determination by the Department of Commerce (“Commerce”) in Certain Kitchen Shelving and Racks from the People's Republic of China: Final Affirmative Countervailing Duty Determination, 74 Fed. Reg. 37,012 (July 27, 2009) (“ Final Determination ”). Plaintiffs also challenge the constitutionality of a new law amending sections 701 and 777A of the Tariff Act of 1930.¹SeePub. L. No. 112–99, 126 Stat. 265–67 (2012) (the “new law”). Commerce and defendant-intervenors, Nashville Wire Products, Inc. and SSW Holdings Co., Inc., oppose Plaintiffs' motion. For the following reasons, the court finds that the new law is constitutional and that the Final Determination is supported by substantial evidence and is otherwise in accord with the law.

Background

I. Procedural History

On August 26, 2008 Commerce initiated a countervailing duty (“CVD”) investigation on certain kitchen appliance shelving and racks (“KASR”) imported from the People's Republic of China (“PRC”) during the calendar year of 2007. See Notice of Initiation of CVD Investigation: Certain KASR from the PRC, 73 Fed. Reg. 50,304 (Aug. 26, 2008). Shortly thereafter, Commercedesignated GWK as a “mandatory respondent” for the investigation. See Certain KASR From the PRC: Preliminary Affirmative CVD Determination and Alignment of Final CVD Determination with Final Antidumping Duty Determination, 74 Fed. Reg. 683, 683–684 (Jan. 7, 2009) (citing Memorandum to Stephen J. Claeys, “Respondent Selection Memo” (Sept. 17, 2008), (Public Rec. 38)). ²

Commerce also initiated a parallel antidumping duty (“AD”) investigation covering KASR imported from the PRC between January 1, 2008 and June 30, 2008. Certain KASR from the PRC: Initiation of AD Investigation, 73 Fed. Reg. 50,596 (Aug. 27, 2008).³

On July 27, 2009, Commerce issued the final results of its CVD investigation. Final Determination, 74 Fed. Reg. at 37,012. Commerce made several findings relevant to the instant litigation. First, Commerce determined that it could impose CVDs on goods from the PRC despite the PRC's NME status in the AD investigation. See Issues and Decision Memorandum for the Final Determination in the CVD Investigation of Certain KASR from the PRC at 25–30, C–570–942 (July 20, 2009) (“ I&D Memo ”). Commerce also determined that GWK received a countervailable subsidy through the provision of wire rod by the government of China (“GOC”) and State–Owned Enterprises (“SOEs”) within the PRC at less than adequate remuneration (“LTAR”). See id. at 14–16. Commerce determined that market price for wire rod in the PRC was distorted by the GOC's substantial presence in the market and therefore used a “world average price” as a benchmark against which to measure the adequacy of remuneration. Id. at 15. Commerce assigned GWK a “Net Subsidy Rate” of 13.30%. See Final Determination, 74 Fed. Reg. at 37,014.

Plaintiffs allege that Commerce made several errors in the Final Determination. Specifically, Plaintiffs argue that (1) Commerce's policy of imposing CVDs on goods from NME countries is contrary to 19 U.S.C. § 1671(a); (2) Commerce's policy of imposing CVDs on goods from NME countries is unreasonable even if 19 U.S.C. § 1671(a) is ambiguous; (3) Commerce erred in finding that certain of GWK's wire rod suppliers that are majority-owned by the GOC are “authorities” under 19 U.S.C. § 1677(5)(B); (4) Commerce erred in finding that certain of GWK's wire rod suppliers that are minority-owned by the GOC are “authorities” under 19 U.S.C. § 1677(5)(B); (5) Commerce erroneously countervailed GWK's wire rod purchases from privately-owned trading companies without first determining that GWK received a financial contribution; and (6) Commerce erroneously discarded in-country benchmarks for the price of wire rod based on the GOC's presence in the wire rod market. Pl. & Pl.-Intervenor's Br. Supp. Mot. J. Agency R. at 1–4 (“Pls.' Br.”).

II. GPX and the New Law

Parallel to the instant case, GPX International Tire Corp., an importer of tires from the PRC, challenged Commerce's policy of imposing CVDs on goods from NME countries. GPX Int'l Tire Corp. v. United States, 33 CIT ––––, ––––, 645 F.Supp.2d 1231, 1239 (2009). Prior to 2007, Commerce refrained from imposing CVDs on goods from NME countries, as it could not identify and measure the effects of government subsidies in a centralized economy. See Carbon Steel Wire Rod from Czechoslovakia: Final Negative CVD Determination, 49 Fed. Reg. 19,370, 19,372–73 (May 7, 1984). The Court of Appeals for the Federal Circuit (“CAFC”) upheld this policy as a reasonable interpretation of CVD law. See Georgetown Steel Corp. v. United States, 801 F.2d 1308, 1309 (Fed.Cir.1986). However, in 2006, Commerce announced that it was reconsidering the PRC's status as a NME country. See AD Investigation of Certain Lined Paper Products from the PRC—China's status as a NME, A–570–901 (Aug. 30, 2006) (“ CLPP from the PRC ”). Although it did not alter China's NME status, id. at 82, Commerce subsequently determined that it could identify and measure the effects of subsidies in the PRC, see CVD Investigation of Coated Free Sheet Paper from the PRC—Whether the Analytical Elements of the Georgetown Steel Opinion are Applicable to China's Present–Day Economy at 10, C–570–907 (Mar. 29, 2007) (“ CFSP from the PRC ”), and therefore began imposing CVDs on goods from the PRC. See Coated Free Sheet Paper from the PRC: Final Affirmative CVD Determination, 72 Fed. Reg. 60,645 (Oct. 25, 2007).

In 2011, the CAFC found that “in amending and reenacting the trade laws in 1988 and 1994, Congress adopted the position that [CVD] law does not apply to NME countries.” GPX Int'l Tire Corp. v. United States, 666 F.3d 732, 745 (Fed.Cir.2011) (“GPX II ”). Therefore, the CAFC concluded that “[CVDs] cannot be applied to goods from NME countries.” Id.

Before the CAFC's mandate was issued in GPX II, Congress enacted the new law. See 126 Stat. at 265–67. The new law has two sections. Id. Section 1 of the new law directs Commerce to impose CVDs on goods from NME countries except where Commerce is “unable to identify and measure subsidies provided by the government of the [NME] country or a public entity within the territory of the [NME] country because the economy of that country is essentially comprised of a single entity.” § 1(a), 126 Stat. at 265. Section 1 applies to all proceedings initiated by Commerce on or after November 20, 2006. § 1(b), 126 Stat. at 265. Section 2, which applies only to proceedings initiated following the enactment of the new law, directs Commerce to “reduce” the AD in all proceedings involving the concurrent imposition of CVDs and ADs where it can “reasonably estimate the extent to which the countervailable subsidy ... increased the weighted average dumping margin” for subject merchandise. § 2, 126 Stat. at 266.

Following the passage of the new law, the CAFC requested additional briefing concerning the impact of the new law on Commerce's petition for rehearing GPX II. See GPX Int'l Tire Corp. v. United States, 678 F.3d 1308, 1311 (Fed.Cir.2012) (“GPX III ”). In assessing the impact of new law, the CAFC concluded that by enacting section 1 “Congress clearly sought to overrule” the holding in GPX II.Id. at 1311. It also noted that section 2 changed CVD law prospectively, as the former law did not include protection against potential double-counting of remedies. Id. at 1311–12. The CAFC remanded so that this Court could evaluate the constitutional claims GPX raised for the first time in its opposition to the petition for rehearing. See id. at 1312–13.

On remand, GPX argued that the new law was a retroactive change to CVD law which “violate[d] the Ex Post Facto Clause of the Constitution, as well as due process and equal protection rights of the Fifth Amendment.” See GPX Int'l Tire Corp. v. United States, 37 CIT ––––, ––––, 893 F.Supp.2d 1296, 1305, Op. 13–2 at 8, 2013 WL 64465 (Jan. 7, 2013) (“GPX IV ”). ⁴ This Court did not rule on whether the new law retroactively changed CVD law, id. at ––––, 893 F.Supp.2d at 1308–09, Op. 13–2 at 14, but found that the new law was nonetheless constitutional even assuming that it did make a retroactive change. See id. at ––––, 893 F.Supp.2d at 1308–18, Op. 13–2 at 14–31.

During the course of the GPX litigation, parties to the instant case...