Monday, August 24, 2015

Report Alleges Massive Fraud by Chinese Extruder

Clearly, the most interesting news to report this month is the blockbuster report uploaded to the world at http://dupreanalytics.com/reports/.  The AEC has commented on that story in a separate piece, and through the media in recent weeks.  However, our trade case continues to move forward with the fourth administrative review now underway, scope requests being processed, and a minor (and rare) victory from the courts.

The AEC is asking the Department of Commerce (DOC) to name Zhongwang China as a mandatory respondent in this year’s administrative review.  Zhongwang was named as a mandatory respondent in the original filing and never responded.  It is unlikely they will this time, even if the DOC asks.  However, getting that on the record could be helpful on other fronts in light of the Dupre report.  We continue to await the Department’s post-preliminary ruling for the third administrative review.  As reported last month, we are hopeful that we will see an increase in rates.

The 5xxx series scope decision is scheduled to be released in early October.  We had asked for that delay due to new data we were able to gather.  We received that information and filed our brief with Commerce.

Our next legislative push will be focused on three things.  First we want to push the Customs Re-Authorization Bill.  Too often, reported violations of circumvention are reported to Customs and end up in the ‘black box’ never to be heard from again.  There are a slew of other changes we are addressing as well.  Once again, the AEC will work with other industries to push for this change.  The second item is to ask elected officials to join us in pushing Customs to launch an investigation into the Zhongwang allegations.  Lastly, we want to start asking for support on the upcoming 5xxx series scope issue.  As in the past, the AEC voice will be heard.  So, look for our emails and instructions in the next few weeks!

Another topic of note this month was the devaluation of the Chinese RMB.  I received a number of questions regarding its impact on our case.  The DOC takes into account currency valuations in the margin calculation.  There is a special formula they use for calculating the exchange rate in adjusting U.S. price in the margin program.  In Chinese cases, however, this is less of an issue because of how the margins are calculated.  Because you are using another country’s values to value Chinese costs and not Chinese values, when China’s currency moves lower it has less of an impact on the margin calculation because it does not benefit them on the cost side of the equation.

In the category of small victories, the U.S. Court of International Trade (CIT) released an opinion in the latest MacLean Fogg remand.  You may recall that the main holding in the original MacLean Fogg decision was that Commerce must apply the CVD rate calculated for the voluntary respondents to the non-reviewed companies in the CVD investigation.  On remand, DOC took a simple average of the two voluntary respondents’ CVD rates.  We argued that the statute requires DOC to use a weight average and by using a simple average DOC unreasonably skewed the “all others” rate lower because the company with the lower rate had far fewer sales.  The Court agreed and ordered DOC to go back and revise the all others rate accordingly.  This will have a small beneficial effect on the “all others” rate for the non-reviewed companies.

As you can read, there are a number of issues that are in process.  We’ve reported several times that circumvention issues and our legislative agenda were key focus areas for us.  That is becoming a reality which may have caught the attention of the entire metals industry.  As always, your continued support and commitment make all of this possible.  I’m looking forward to seeing you in Chicago next month at our Management Conference!

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