Slip Op. 08-15
UNITED STATES COURT OF INTERNATIONAL TRADE
ROYAL THAI GOVERNMENT,
SAHAVIRYA INDUSTRIES PUBLIC
COMPANY LIMITED,
Before: Richard W. Goldberg
Plaintiffs, Senior Judge
v. Consol. Court No. 02-00026
UNITED STATES,
Defendant,
and
UNITED STATES STEEL
CORPORATION,
Defendant-
Intervenor.
OPINION
[Commerce’s remand results are sustained.]
Date: January 31, 2008.
Vinson & Elkins, LLP (Kenneth J. Pierce, Robert E. DeFrancesco, and
Victor S. Mroczka) for Plaintiffs the Royal Thai Government and
Sahaviriya Steel Industries Public Company Limited.
Jeffrey S. Bucholtz, Acting Assistant Attorney General, David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Claudia Burke and David S.
Silverbrand); Mykhaylo A. Gryzlov, International Attorney-Advisor,
Office of the Chief Counsel for the Import Administration, United
States Department of Commerce for Defendant United States.
Skadden Arps Slate Meagher & Flom LLP (John J. Mangan) for
Defendant-Intervenor United States Steel Corporation.
Court No. 02-00026 Page 2
Goldberg, Senior Judge: This matter is before the Court following
a court-ordered remand. See Royal Thai Gov’t v. United States, 31
CIT __, 502 F. Supp. 2d 1334 (2007). In Royal Thai, the Court
ordered Commerce to reconcile its inconsistent treatment of the
Thai 10% “Normal” tariff rate. For the reasons stated below, this
Court sustains Commerce’s remand determination.
I. BACKGROUND
The procedural history of this case is set forth at length
in Royal Thai, familiarity with which is presumed. Id. Briefly,
the relevant facts are as follows: after Commerce determined that
the Thai duty exemption programs provided a subsidy to the Thai
steel sector, Commerce still had to calculate the amount of benefit
these programs provided in order to impose the appropriate
countervailing duties. Initially, Commerce determined that a 1%
“Reduced” tariff rate would have applied to imports of steel slab
absent the duty exemption programs, and imposed countervailing
duties based on this rate. This Court remanded Commerce’s initial
determination because the agency utilized the 1% “Reduced” tariff
rate as its benefit calculation benchmark without considering
whether this rate was itself a countervailable subsidy.
On remand, Commerce found that it could not analyze the
countervailability of the 1% “Reduced” tariff rate under its normal
methodology because the agency lacked information regarding the
tariff rate applicable to steel slab in its absence. Adopting an
Court No. 02-00026 Page 3
alternative methodology, Commerce found that the 1% “Reduced”
tariff rate was specific to the steel sector and rejected this rate
as its benefit calculation benchmark on this basis. In deciding to
apply its alternative methodology, Commerce found that the 10%
“Normal” tariff rate was not an appropriate benchmark for analyzing
the countervailability of the 1% “Reduced” tariff because this rate
was inapplicable to imports of steel slab. Despite this rejection,
Commerce adopted the 10% “Normal” tariff rate as its benchmark for
calculating the benefit accruing from the duty exemption programs.
This disparate treatment of the 10% “Normal” tariff rate was
unsupported and arbitrary. Accordingly, this Court remanded the
case again and instructed Commerce to make one of three findings
regarding the 10% “Normal” tariff rate: (1) that the 10% “Normal”
tariff is a meaningful benchmark for benefit calculation; (2) that
the 10% “Normal” tariff rate is not a meaningful benchmark for
benefit calculation; or (3) that steel slab is distinct from other
products because its 10% “Normal” tariff rate is a meaningful
benchmark, but the 10% “Normal” rate for other products is not
similarly meaningful.
In its remand determination, Commerce made the second of
the three permitted findings. 1 Utilizing its alternative
1
This Court provided Commerce further instruction on the second
permitted finding, explaining that
(footnote continued)
Court No. 02-00026 Page 4
methodology, Commerce found the 1% “Reduced” tariff rate specific
to the steel industry. Despite this specificity finding, Commerce
found that it could not establish the countervailability of the 1%
“Reduced” tariff rate because it could not prove that the rate also
provided a benefit or a financial contribution. As a result,
Commerce adopted the 1% “Reduced” tariff rate as its benefit
calculation benchmark, and determined that the duty exemption
programs yielded net subsidy rates of 0.58 and 0.07 percent. The
Royal Thai Government (“RTG”) and Sahavirya Industries Public
Company, Limited (“SSG”) now challenge Commerce’s rejection of the
10% “Normal” tariff rate. United States Steel Corporation (“U.S.
Steel”) challenges Commerce’s use of the 1% “Reduced” tariff rate
as its benefit calculation benchmark.
II. JURISDICTION AND STANDARD OF REVIEW
This Court has jurisdiction over this action pursuant to 28
U.S.C. § 1581(c). This Court must sustain any determination,
finding, or conclusion made by Commerce in its remand determination
unless it is “unsupported by substantial evidence, or otherwise not
If Commerce makes [this finding], then Commerce must
prove the existence of a subsidy without reference to
the “Normal” tariff rates. If, under this second
finding, it cannot prove the existence of a benefit,
then it cannot prove that the “Reduced” rate is a
countervailable subsidy, and it must use the 1% tariff
rate as a benchmark to calculate the countervailable
subsidy that SSI received through its import duty
exemption programs.”
Royal Thai, 31 CIT at __, 502 F. Supp. 2d at 1344.
Court No. 02-00026 Page 5
in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i)(2000).
Substantial evidence “means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). “As long as the
agency’s methodology and procedures are reasonable means of
effectuating the statutory purpose, and there is substantial
evidence in the record supporting the agency’s conclusions, the
court will not impose its own views as to the sufficiency of the
agency's investigation or question the agency's methodology.”
Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-05,
636 F. Supp. 961, 966 (1986).
III. DISCUSSION
Commerce can impose countervailing duties on foreign
products that are imported, sold, or likely to be sold in the
United States, if a foreign government has directly or indirectly
subsidized its manufacture, production, or export. See 19 U.S.C. §
1671(a); accord Allegheny Ludlum Corp. v. United States, 24 CIT
452, 112 F. Supp. 2d 1141 (2000). These duties are intended “to
offset the unfair competitive advantage that foreign producers
would otherwise enjoy from export subsidies paid by their
governments.” British Steel PLC v. United States, 20 CIT 663, 699,
929 F. Supp. 426, 445 (1996) (citing Zenith Radio Corp. v. United
States, 437 U.S. 443, 456 (1978)). To achieve this goal, Commerce
must attempt to approximate the amount of benefit provided by an
Court No. 02-00026 Page 6
alleged subsidy. Before it can make this calculation, Commerce
must establish a benefit calculation benchmark, or more precisely,
determine what tariff rate would have applied absent the alleged
subsidy. Once this benchmark is established, Commerce will have a
reference point from which it can determine the amount of benefit
that has been conferred. However, Commerce must also determine
that its proposed benchmark is not itself a countervailable
subsidy. AL Tech Specialty Steel Corp. v. United States, 29 CIT
__,__, 366 F. Supp. 2d 1236, 1237 n.3 (2005). To determine
countervailability, Commerce normally conducts a specificity
analysis because an alleged subsidy is only countervailable if
specific to an industry or group of users. Commerce’s typical
specificity methodology examines the relative benefits accruing
from an alleged subsidy in order to determine its distribution.
However, to apply its relative benefit methodology, Commerce must
be able to determine what tariff rate would have applied in the
absence of the proposed benchmark.
A. Commerce’s Specificity Analysis
RTS and SSI argue that Commerce erred in rejecting the 10%
“Normal” tariff rate and, in turn, its preferred methodology. If
Commerce could have relied on the 10% “Normal” tariff rate as an
alternative tariff rate, it clearly could have applied its relative
benefit methodology. This Court, however, finds that Commerce’s
decision to reject this rate and apply alternative methodology is
Court No. 02-00026 Page 7
supported by substantial evidence. Generally, Commerce is granted
broad discretion in its administration of the countervailing duty
laws. See Ceramica Regiomontana, S.A., 10 CIT at 404—405, 636 F.
Supp. at 966. However, Commerce is still required to “either
conform itself to its prior decisions or explain the reasons for
its departure.” Citrosuco Paulista, S.A. v. United States, 12 CIT
1196, 1206, 704 F. Supp. 1075, 1088 (1988). Here, Commerce
adequately explained its rationale for deviating from its past
methodology. Commerce first rejected the 10% “Normal” tariff rate
because it found “[u]nder the Thai tariff system, the term ‘Normal’
rate is a misnomer, [as] Thai ‘Normal’ rates are not usually
applied in assessing duties upon imports under the vast majority of
the HTS categories. . . .’” Results of Redetermination on Remand
Pursuant to Royal Thai Government, et al. v. United States, Slip
Op. 04-91 (Ct. Int’l Trade July 27, 2004) (May 4, 2007), at 18-19.
After rejecting the 10% “Normal” rate, Commerce found it necessary
to adopt an alternative methodology because it lacked the tariff
rate information required to conduct its standard analysis. This
Court finds Commerce’s explanation a wholly reasonable basis for
its deviation from past agency practice, and accordingly,
Commerce’s decision is supported by substantial evidence.
Court No. 02-00026 Page 8
B. Commerce’s Use of the 1% “Reduced” Tariff Rate as a
Benchmark
U.S. Steel argues that Commerce’s finding that the 1%
“Reduced” tariff rate is specific required Commerce to
automatically discard this rate as a benchmark. However, the Court
has repeatedly rejected U.S. Steel’s argument noting “[t]here are
multiple statutory criteria for establishing the existence of a
countervailable subsidy. The absence of any one of those criteria
is sufficient to prove non-countervailability . . . .” Royal Thai
Gov’t v. United States, 30 CIT at __, 441 F. Supp. 2d 1350 at 1366
n.16 (2006). Within context of this action, this Court instructed
Commerce that “under a finding of specificity alone, Commerce may
not . . . discard the 1% reduced rate as a benchmark. Commerce
must prove that the 1% reduced rate is a countervailable subsidy
and do so without reference to the rejected ‘Normal’ rates.” Royal
Thai, 31 CIT at __, 502 F. Supp. 2d at 1343. In following these
instructions, Commerce did not err in refusing to reject the 1%
“Reduced” tariff rate as its benefit calculation benchmark.
U.S. Steel also argues that Commerce erred in concluding
that it could not establish the countervailability of the 1%
“Reduced” tariff rate. To establish that an alleged subsidy is
countervailable, Commerce must prove the existence of three
elements: (1) financial contribution; (2) benefit conferred; and
Court No. 02-00026 Page 9
(3) specificity. 19 U.S.C. §§ 1677 (5)(A),(5)(D),(5)(E). In this
action, Commerce concluded that it could not establish
countervailability because it lacked information regarding
applicable alternative tariff rates, and without this information
it could not demonstrate that a benefit or financial contribution
had accrued to the Thai steel sector. According to U.S. Steel,
this conclusion was in error because evidence demonstrated a 5%
“Alternative” tariff rate would have applied to steel slab in the
absence of the 1% “Reduced” tariff rate. Commerce, however,
specifically found the 5% “Alternative” tariff rate inapplicable.
Commerce’s remand determination explains that while Thai Ministry
of Finance Notifications indicate that a 5% “Alternative” tariff
rate has applied to steel slab imports in the past, the agency
chose to avoid the “speculative nature of attempting ‘to predict at
a later point in time whether slab would have reverted back to a
semi-finished product or would have still been categorized in the
“Reduced” rate schedule as a primary product.’” Results of
Redetermination on Remand Pursuant to Royal Thai Government, et al.
v. United States, Slip Op. 07-119 (Ct. Int’l Trade Aug. 6, 2007)
(Oct. 5, 2007), at 8—9 (quoting Verification Report, at 5.).
Commerce’s explanation makes clear that determining an alternative
tariff rate for steel slab imports under the Thai tariff
nomenclature is particularly complicated in light of the fact that
both the rate and classification of products are subject to
Court No. 02-00026 Page 10
frequent change. In the end, Commerce concluded that it lacked
sufficient information to establish any alternative tariff rate,
and that it could not establish the countervailability of the 1%
“Reduced” tariff rate. Commerce’s finding that the 1% “Reduced”
tariff rate is an appropriate benefit calculation benchmark is
supported by substantial evidence.
IV. CONCLUSION
In light of the foregoing, the Court sustains the Remand
Determination because it is in accordance with law and supported by
substantial evidence. Judgment shall be entered accordingly.
_/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Date: January 31, 2008
New York, New York