By George W. Thompson
I’ve already discussed here the exciting lives importers lead when they bring merchandise covered by an antidumping duty order into the United States. They take the risk that the dumping margin applicable at the time of entry may go up, or down, years later as the result of a Commerce Department administrative review. The possibility of retroactive duty increases must cause even the hardiest souls a few sleepless nights.
The Court of Appeals for the Federal has just provided more clarity to the dumping margin determination process. In Albemarle Corporation v. United States, the court rejected Commerce’s approach to setting the margin for “voluntary respondents”. The decision is worth noting for three reasons: the underlying facts, while unusual, are likely to recur; the court rarely overturns a Commerce policy as inconsistent with the governing statute; and it provides an opportunity to review the procedures the agency follows in administrative reviews.
Commerce Conducts Administrative Reviews to Determine the “Final” Dumping Margins
Commerce is authorized to conduct annual “administrative reviews” of antidumping duty orders at the request of exporters, importers or the domestic petitioning industry. The purpose of reviews is to determine whether the rate of dumping has changed. The review results will apply to entries of covered merchandise made during the period examined by Commerce. Thus, the final margins are not determined until after a review’s completion, and these will govern liquidation of the covered entries by Customs and Border Protection.
To cut down on the work involved in conducting a review, Commerce has authority (which it typically exercises) to identify two or more “mandatory” respondents, which usually are the largest exporters for the one-year period covered by the review. Mandatory respondents will undergo a very extensive data reporting process, and will receive company-specific margins based on the responses.
The remaining “voluntary” respondents in the review are assigned the “all others” rate, which is the average of the mandatory respondents’ margins. In cases involving China, the exporters must demonstrate they are not subject to Chinese government control to be eligible.
“De Minimis” Margins for Both Mandatory Respondents
The Albemarle appeal arose from an administrative review of the order on Certain Activated Carbon from China. The two mandatory respondents achieved “de minimis” margins of dumping (that is, less than 0.5 percent). Citing its policy against using such margins to determine the voluntary respondents’ “all others” rate, Commerce declined to average them.
Instead, the agency calculated those margins using those given the voluntary respondents in the immediately preceding administrative review. For two companies, which were voluntary respondents in that review, this was the previous “all others” rate. One exporter, which was a mandatory respondent in that previous review, was assigned the same margin it had gotten then.
On appeal, the Court of International Trade rejected Commerce’s position, in part. The court held that the first two exporters should have gotten a rate based on the voluntary respondents de minimis margins, which, of course, would be de minimis as well. For the third exporter, the CIT found it was permissible for Commerce to have used the same margin calculated in the previous review. Both Commerce and that third exporter then appealed to the Federal Circuit
Commerce “Policy” Is Subordinate to Clear Statutory Requirement
That court rejected Commerce’s position entirely, as inconsistent with the underlying statute. In its view, the antidumping statute specifically requires that when all of the mandatory respondents’ margins are de minimis or zero, the “all others” rate should be based on their average.
The law provides that “Commerce ‘may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated, including averaging the estimated weighted average dumping margins determined for the exporters and producers individually investigated.’ 19 U.S.C. § 1673d(c)(5)(B).” According to the legislative history, “ ‘[t]he expected method in such cases will be to weight-average the zero and de minimis margins . . . provided that volume data is available.” ’ Commerce may depart from the “expected method” only when its use is “ ‘not feasible’ ” or “ ‘would not be reasonably reflective of potential dumping margins.’ ”
Commerce failed to establish that either ground for jettisoning the “expected method” applied. The court refuted the contention that averaging de minimis margins was contrary to agency policy by noting that the statute specifically directed such an approach.
Accordingly, the Federal Circuit upheld the CIT’s decision concerning the first two exporters, but reversed it regarding the third. All of them were entitled to application of a de minimis “all others” rate.
A Small, But Important, Break for Importers and Exporters
Granted, the Albemarle decision applies to the very specific fact situation arising when all mandatory respondents have margins at the de minimis level. That doesn’t arise all that often, but it does happen. When it does, the voluntary respondents are now assured that they, too, will receive a de minimis margin. This should encourage more exporters to participate in reviews. After all, the possibility of receiving a favorable rate for minimal effort seems a mighty enticing incentive.
Importers benefit as well, since the exporter’s margin sets their amount of antidumping duty liability for previous entries as well as the deposit rate for future ones.
