Before the CIT, Northern Tool explained that there was no disagreement as to who produced the hand trucks (Taifa) and that the only issue in question was the identity of the exporter of these goods. Northern Tool argued that CBP should have applied Taifa’s rate because the exporter of the Taifa-produced hand trucks was located in a market economy country (Taiwan) or, alternatively, that Taifa should be considered the exporter because Taifa had knowledge at the time of sale that the hand trucks were destined for the United States.
In response, CBP observed that its role in the application of antidumping duties was “merely ministerial” and that it was required to “precisely” apply the instructions given by the U.S. Department of Commerce (Commerce). CBP asserted that Northern Tool was improperly attempting to use the court’s jurisdictional authority under 28 U.S.C. § 1581(a) to challenge the applicability of the antidumping duty assessment rate assigned to entities that had been unable to demonstrate that they operated independently of the Chinese government, otherwise known as the People’s Republic of China (PRC)–wide rate. CBP claimed that Northern Tool’s arguments should have been raised to Commerce in the context of the relevant administrative review.
The CIT’s decision effectively halts what would otherwise have been an additional substantial loophole in the application of antidumping duties on Chinese imports. As the CIT explained, “[w]hen non-market economy merchandise is exported by an exporter from a market economy third country, the applicable rate is that of the non-market economy supplier. . . . The purpose of this is to ensure that high-rate suppliers do not funnel their products through market economy exporters and to ensure that market economy resellers ‘bear the consequences’ of using non-market economy suppliers” (citations omitted). In its appeal, Northern Tool did not dispute this approach, but instead argued that where sales to the United States were made through a market economy reseller, CBP is obligated to apply the antidumping duty assessment rate assigned to the Chinese company that the reseller claims was responsible for producing that merchandise. If this approach were allowed, high-rate suppliers could funnel their products through market economy exporters in a manner that would fall entirely outside of Commerce’s administrative review process. This is because the market economy reseller need only identify a low-rate supplier as the producer of the goods in sales documentation presented to CBP in order to avail itself of that low rate. By rejecting Northern Tool’s appeal, the CIT has made clear that importers using market economy resellers to source Chinese goods must appear before Commerce in the context of an open, public administrative proceeding in order to ensure the applicability of an individual Chinese company’s rate. If an importer fails to do so, it will find no back door through which to avail itself of such a rate through CBP’s black box administrative protest procedures.