Earlier this month United States Court of Appeals for the Federal Circuit (CAFC) rendered a decision in the MacLean Fogg v. U.S. case that threatens U.S. tariffs on Chinese extrusions entering the United States. The decision, released June 3, 2014, stems from an appeal by the Chinese respondents in connection with the China-wide all-others CVD rate. The previous Court of International Trade (CIT) appeal resulted in the DOC lowering the rate from 347% to 147%. In that case, none of the mandatory respondents participated; instead the Department calculated CVD rates for two voluntary respondents. The other non-reviewed companies argued that instead of receiving the PRC-wide CVD rate of 147%, they should have received an “all-others” rate reflecting the weighted-average of the two voluntary respondents (i.e., 8.5%) The CAFC took the CIT’s decision even further, invalidating the DOC’s regulation with regard to the DOC’s methodology of excluding voluntary respondents in the “all-others” rate calculation. Specifically, though the statute provides that the all-others rate should include any “individually”-calculated margins, the CAFC attacked the DOC’s regulation for limiting the statute’s directive to include “individually” calculated rates to include only mandatory – and excluding voluntary – respondents’ rates in its all-others calculation. The CAFC has reversed and remanded this proceeding to the DOC for further proceedings and recalculation of the all-others margin. This determination represents a blatant overstep by the CAFC, especially given that the decision overturns more than 20 years of DOC practice and regulatory construct.
Specific to our case, the impacts could be felt in our pending second administrative review, which is well underway. In fact, we expect a preliminary decision from the DOC on the AD and CVD case this week. On the AD side, both mandatory respondents pulled out in the last few months leaving only Kromet as the sole voluntary respondent. Ordinarily, the rate that the DOC will calculate for Kromet will only apply to Kromet. However, in light of this decision, the rate will apply to ”all others” as well. That assumes this ruling stands.
Last week our lead attorney on this case, Robert DeFrancesco, and I made calls to staffers of key Senators in U.S. trade matters. They agreed to intervene at the DOC on our behalf to make our case. With the administrative review preliminary decision expected so soon, and considering the timing of the CAFC’s ruling, there is little we can do. However, the expected DOC decision is only the preliminary ruling. The full ruling for the second annual review is not expected until late this year. That gives us time to rally support and create a legal strategy to overturn the MacLean-Fogg decision. There will certainly be more to follow on this, and I will be asking you for your support as soon as a strategy is developed.