In this action Yantai CMC Bearing Co. Ltd. ("Yantai CMC" or Plaintiff") challenges the final results of the U.S. Department of Commerce ("Commerce") in its administrative review of the antidumping duty order on tapered roller bearings from the People's Republic of China ("PRC" or "China") for the June 1, 2013, to May 31, 2014, period of review ("POR"). Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China, 81 Fed. Reg. 1,396 (Dep't Commerce Jan. 12, 2016) (final results of the antidumping duty admin. review; 2013-2014) ("Final Results"), Public Joint Appendix ("PJA") Tab 17, ECF No. 39; Public Admin. R. ("PR") 235, ECF No. 21-1, and accompanying Issues and Decision Mem., A-570-601 (Jan. 4, 2016) ("I & D Mem."), PJA Tab 16, PR 227.
On February 3, 2014, Commerce initiated an administrative review of the antidumping duty order on tapered roller bearings for the June 1, 2013 to May 31, 2014, POR. Initiation of Antidumping and Countervailing Duty Admin. Reviews, 79 Fed. Reg. 44,390 (Dep't Commerce July 31, 2014), PJA Tab 1, PR 12. Yantai CMC was selected as a mandatory respondent. Respondent Selection Mem. at 8, PJA Tab 2; PR 19; Confidential Joint Appendix ("CJA") Tab 1, ECF No. 38; Confidential Admin. R. ("CR") 6, ECF No. 21-2.
Commerce preliminarily determined that Yantai CMC had failed to rebut the presumption of government control. Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China, 80 Fed. Reg. 38,665, 38,666 (Dep't Commerce July 7, 2015) (prelim. results of antidumping duty admin. review), PJA Tab 12, PR 213. Commerce, therefore, assigned Yantai CMC the countrywide rate of 92.84 percent. Id. at 38,666. In the final results, Commerce confirmed this finding. Final Results, 81 Fed. Reg. at 1,396-97. In its Issues & Decision Memorandum, Commerce explained that Yantai CMC had "demonstrated a lack of de jure control" but it "[did] not satisfy the criteria demonstrating an absence of de facto government control over export activities."
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012),
The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). "Substantial evidence is `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Huaiyin Foreign Trade
I. Legal Framework for Separate Rate Status in Proceedings Involving Non-Market Economy Countries
In antidumping duty proceedings involving a country that Commerce considers to have a nonmarket economy ("NME"), including China, Commerce employs a rebuttable presumption that all enterprises operating within the NME country are controlled by the government. Jiangsu Jiasheng Photovoltaic Tech. Co., Ltd. v. United States ("Jiangsu Jiasheng II"), 39 CIT ___, ___, 121 F.Supp.3d 1263, 1266 (2015); see also Huaiyin Foreign Trade Corp., 322 F.3d at 1372 ("[A]s it has done in previous investigations, the Department adopted in this proceeding a presumption that the PRC was an [NME] country pursuant to 19 U.S.C. § 1677(18)(A), requiring companies desiring an individualized antidumping duty margin to so request and to demonstrate an absence of state control."); Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed. Cir. 1997) (reviewing and affirming Commerce's use of the NME presumption). Commerce assigns each exporter of subject merchandise a single countrywide rate, unless the "exporter can affirmatively demonstrate an absence of government control, both in law (de jure) and in fact (de facto)" over its export-related activities. Jiangsu Jiasheng II, 39 CIT at ___, 121 F.Supp.3d at 1266; see also Sigma Corp. 117 F.3d at 1405 ("no manufacturer would receive a separate antidumping duty rate unless it could demonstrate that it enjoyed both de jure and de facto independence from the central government"). The exporter of subject merchandise bears the burden of showing it is autonomous of government control. AMS Assoc., Inc. v. United States, 719 F.3d 1376, 1379-80 (Fed. Cir. 2013); see also Sigma Corp., 117 F.3d at 1405-06 (Commerce's decision to place burden on exporters is justified because exporters have best access to information) (citing Zenith Elecs. Corp. v. United States, 988 F.2d 1573, 1583 (Fed. Cir. 1993)).
To establish whether an exporter is eligible for a separate rate, Commerce applies a test it first set forth in Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 Fed. Reg. 20,588, 20,589 (Dep't Commerce May 6, 1991), and modified in Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59
To determine whether an exporter is free of de facto government control, Commerce considers four factors: (i) whether export prices are set by or subject to the approval of a governmental authority; (ii) whether the exporter has authority to negotiate and sign contracts and other agreements; (iii) whether the exporter has autonomy from the government in making decisions regarding the selection of its management; and (iv) whether the exporter retains the proceeds of its export sales and makes independent decisions regarding the disposition of profits or financing of losses. See Policy Bulletin 05.1 at 2; see also Jiangsu Jiasheng Photovoltaic Technology Co., Ltd. v. United States ("Jiangsu Jiasheng I"), 38 CIT ___, ___, 28 F.Supp.3d 1317, 1349 (2014).
II. Commerce's Finding that Yantai Did Not Rebut the Presumption of State Control is Supported by Substantial Evidence
The court will uphold a Commerce determination provided it is based on substantial evidence. 19 U.S.C. § 1516a(b)(1)(B)(i). Plaintiff argues that Commerce's denial of separate rate status ignored record evidence of Yantai CMC's autonomy from Chinese government control and that Commerce, in effect, applied an irrebuttable presumption of control when it focused on the potential for control resulting from an ownership interest in the exporter. Pl.'s Mem. at 8-13. Defendant responds that Commerce's determination is supported by substantial evidence in the record and constituted a proper application of the de facto test. Def.'s Resp. at 8-17. For the reasons detailed below, the court sustains Commerce's determination.
Commerce applies a rebuttable presumption of state control to exporters from a nonmarket economy country, such as China. Jiangsu Jiasheng II, 39 CIT at ___, 121 F.Supp.3d at 1266; see also Huaiyin Foreign Trade Corp., 322 F.3d at 1372. The burden of showing autonomy from government control lies with the exporter, in this case, Yantai CMC. AMS Assoc., 719 F.3d at 1379; see also Sigma Corp. 117 F.3d at 1405-06 (citations omitted). In the underlying administrative proceeding, Commerce reviewed record evidence and made a determination that Yantai CMC did not demonstrate an absence of de facto control by the Chinese government. I & D Mem. at 32-33; see also Separate Rate Mem. at 4-5. This determination was based upon Yantai CMC's ownership chain, which extended from the Chinese government to Yantai CMC. I & D Mem. at 32-33; see also Separate Rate Mem. at 4-5. Specifically, Commerce reviewed questionnaire responses and articles of association from Genertec, which owned China National Machinery Import & Export Corporation ("CMC"), which, in turn, owned Yantai CMC with Paryocean Company Limited ("Paryocean"). See I & D Mem. at 32-33 and nn. 133-138; Separate Rate Mem. at 4-5 and nn. 13-21.
Having established this chain of indirect ownership, Commerce noted that it "would expect any majority shareholder, including a government, to have the ability to control... the operations of the company" and that "[t]he record in this case supports that expectation." Separate Rate Mem. at 4; see also I & D Mem. at 32. Commerce based this finding on its review of the articles of association for Yantai CMC, CMC, and Genertec, as well as the record evidence showing SASAC's exercise of authority via the chain of control. See generally I & D Mem. at 32-33; Separate Rate Mem. at 4-5 and nn. 16-21; Def.'s Resp. at 10-12. Specifically, Commerce reviewed Genertec's articles of association, which provide SASAC with the ability to appoint Genertec's directors, and the record, which showed SASAC exercised this authority. I & D Mem. at 32 and n. 133; Separate Rate Mem. at 4 and n. 16; see also Yantai CMC Second Suppl. Section A Resp. (May 28, 2015), CJA Tab 6, CR 434, Ex. 2 ("[Genertec] Articles of Assoc.") (showing relationship between Genertec and SASAC) and Ex. 3 ("Notice of Appointment [Genertec]") (showing the appointment of four directors). Commerce then noted that Genertec "has the ability to appoint all board members of its wholly-owned PRC company ([CMC])," I & D Mem. at 32 and n. 134;
Further, as the majority owner of Yantai CMC, CMC has the authority to appoint the majority of Yantai CMC's board.
Based upon its review of these facts, Commerce determined that "Yantai CMC has not demonstrated an absence of de facto control" and that "evidence demonstrates that, via SASAC, the PRC government exercises its rights inherent in majority ownership, as expected." Separate Rate Mem. at 4. Yantai CMC does not appear to contest Commerce's factual findings as to its chain of ownership and the line of control extending through its corporate structure, except to assert that it is "extremely attenuated, based on four degrees of separation at the corporate entity level between SASAC and Yantai CMC." Pl.'s Mem. at 9. Plaintiff claims that Commerce's determination was not based on substantial evidence in the record, see Pl.'s Mem. at 7-13, but, in fact, Plaintiff seeks to have the court reweigh the evidence.
Plaintiff asserts that Commerce "ignored" evidence that "none of [Yantai CMC's] managers or board members ... had any relationships with any level of the PRC government" and that the record contained "[no] [sic] evidence showing that the POR managers and board members... disregarded the normal corporate governance structure or interfered with the day-to-day operations of Yantai CMC." Pl.'s Mem. at 7. As proof of this, Plaintiff cites to statements it made in its questionnaire responses. Id. (citing to see also Yantai CMC Section A Resp. at 8; Yantai CMC Suppl. Section A & C Resp. I at 13). Similarly, Plaintiff claims that "Commerce ignored documentation demonstrating that Yantai CMC's management team is selected by its board of directors" and the company is not obligated to submit its "candidates for managerial positions ... for approval to any government entity." Pl.'s Mem. at 8. Again, Plaintiff cites to statements made in its questionnaire responses. Id. (citing to Yantai CMC Section A Resp. at 8; Yantai CMC Suppl. Section A & C Resp. I at 13).
Commerce's role in an administrative proceeding is to weigh the evidence established in the record. See Camau Frozen Seafood Processing Import Export Corp. v. United States, 38 CIT ___, ___, 968 F.Supp.2d 1328, 1337 (2014). It is the respondent's burden to create the record. See Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1336 (Fed. Cir. 2002) (respondent has burden to create an accurate record); Zenith Elecs. Corp., 988 F.2d at 1583 ("The burden of production [belongs] to the party in possession of the necessary information."). In the instant proceeding, Commerce determined to give more weight to record evidence such as the chain of ownership from
Plaintiff claims that "there was no record evidence" that "Yantai CMC's board's overseeing of the company's management, as part of its normal obligations to the company in any way translated into any interference with the company's daily operations, let alone export activities." Pl.'s Mem. at 8. Plaintiff appears to misunderstand its burden. Plaintiff's assertion fails to demonstrate "autonomy from the central, provincial and local governments in making decisions regarding the selection of management." Policy Bulletin 05.1 at 2. Instead, it challenges Commerce's finding on the basis that the agency failed to consider evidence that was not placed on the record by Yantai CMC. As the exporter in an NME country and an entity that is indirectly majority-owned by SASAC, Yantai CMC had the burden to bring forth evidence establishing its autonomy from government control to rebut the presumption of state control. Because Yantai CMC failed to produce such evidence, Commerce reasonably found that the presumption of state control was not rebutted.
Plaintiff argues that Commerce erred in its de facto analysis by "focus[ing] on majority government ownership to the exclusion of all other traditional de facto factors" and that Commerce's "reli[ance] upon the notion of a theoretical `potential' for Chinese government control ... [was] problematic from a basic evidentiary perspective" because there was "no record evidence ... that there was any involvement of the shareholders of Yantai CMC in its export activities." Pl.'s Mem. at 9-10. According to Yantai CMC, this amounts to an "irrebuttable presumption" because "no information or argument regarding the other de facto criteria would be sufficient to overcome this theoretical, `potential' government control" regardless of how remote the ownership interest might be. Id. at 10. Defendant responds that Yantai CMC "do[es] not demonstrate any error in Commerce's analysis," that Commerce is "entitled to presume that the Chinese government controls Yantai CMC," and that Yantai CMC has the burden to rebut the presumption. Def.'s Resp. at 9, 16-17 (emphasis omitted). Yantai CMC's arguments are unavailing.
Plaintiff misunderstands the interplay between the presumption of government control and the four factor de facto test. Commerce applies a presumption of government control for entities operating within an NME and permits the respondent to rebut this presumption by satisfying the de jure and de facto tests. The prong of the de facto test at issue in this case involves whether the exporter or respondent "has autonomy from the ... government[ ] in making decisions regarding the selection of its management." Policy Bulletin 05.1 at 2. Yantai CMC placed documents on the record explaining the corporate ownership structure and relationship between SASAC, Genertec, CMC, and Yantai CMC. See supra pp. 9-11. Commerce reviewed this documentation and concluded that Yantai CMC did not have autonomy from the Chinese government as a result of this chain of ownership through which SASAC was an indirect majority owner of Yantai CMC. That Commerce considered this to be dispositive in the instant case does not mean that the agency misapplied the presumption or made it irrebuttable. That particular facts (majority ownership) may be sufficient to
As noted above, Commerce requires that exporters satisfy all four factors of the de facto control test in order to qualify for separate rate status. See Advanced Tech. & Materials Co. v. United States, 37 CIT ___, ___, 938 F.Supp.2d 1342, 1349 (2013), aff'd without op., 581 Fed.Appx. 900 (Fed. Cir. 2014) (quoting Commerce's second remand determination "each of the de facto prongs must be satisfied for a company to get a separate rate"); see also Policy Bulletin 05.1 at 2. Specifically, the third factor asks "whether the respondent has autonomy from the ... government[ ] in making decisions regarding the selection of management." Policy Bulletin 05.1 at 2. As an exporter in an NME country that is indirectly majority-owned by the government, Yantai CMC has the burden to show that it has such autonomy. Sigma Corp., 117 F.3d at 1406. Yantai CMC failed to meet the third factor of the test. Given that all four factors must be satisfied, Commerce had no further obligation to continue with the analysis.
III. Commerce's Decision to Assign Yantai the Countrywide Rate is in Accordance with Law
Plaintiff argues that "Commerce effectively assigned an [AFA] rate to Yantai CMC because it was denied separate rate status" when the countrywide rate was "based on AFA during the 2006-2007 administrative review." Pl.'s Mem. at 13. Plaintiff contends this was unlawful because Yantai CMC cooperated to the best of its ability in the instant proceeding. Pl.'s Mem. at 13-15. Defendant responds that "Commerce [did not] rely upon facts available, or [AFA], in determining a rate for Yantai CMC. Rather, Commerce found that Yantai CMC failed to meet its burden of rebutting the presumption of government control, and that as a result, Yantai CMC was found to be part of the China-wide entity, and subject to the [countrywide] rate." Def.'s Resp. at 18. The court agrees.
The use of AFA and the need to establish facts to obtain a separate rate are distinct concepts. Advanced Tech., 31 CIT at ___, 938 F.Supp.2d at 1351; Watanabe Group v. United States, 34 C.I.T. 1545, 1551 n. 8 (2010) ("These are two distinct legal concepts: a separate AFA rate applies to a respondent who has received a separate rate but has otherwise failed to cooperate fully whereas the [countrywide] rate applies to a respondent who has not received a separate rate"). As discussed above, in antidumping proceedings involving NME countries, Commerce presumes that all entities operating within the country are subject to government control. Those entities "desiring an individualized antidumping duty margin" must request a separate rate and show they operate autonomously from government control. Huaiyin Foreign Trade Corp. 322 F.3d at 1372; see also Jiangsu Jiasheng II, 39 CIT at ___, 121 F.Supp.3d at 1266. When an exporter is able to show autonomy from state control, Commerce assigns it a separate rate. See Sigma Corp., 117 F.3d at 1405-07. However, when an exporter is unable to "affirmatively demonstrate an
Yantai CMC made this argument during the administrative proceeding and Commerce rejected it, noting that the Court of International Trade "addressed and rejected a similar argument" in Advanced Tech. I & D Mem. at 34 ("a separate AFA rate applies to a respondent who has received a separate rate but has otherwise failed to cooperate to the best of its ability whereas the countrywide rate applies to a respondent who has not received a separate rate"). Plaintiff offers the court nothing new in support of its argument. This court agrees that Commerce assigned Yantai CMC the separate rate because it failed to rebut the presumption of government control. The court, therefore, sustains Commerce's determination as in accordance with law.
Based on the foregoing, the court denies Plaintiff's motion for judgment on the agency record. Judgment will issue separately.