CIT Affirms 112.81% Dumping Margin for Exporter of Chinese Shrimp Based on Evidence of Import Fraud

News & Insights
Jun 30, 2014

The CIT today issued a public version of its May 20, 2014 decision affirming Commerce’s assignment of a 112.81% dumping margin to Hilltop International in the 2008-2009 and 2009-10 administrative reviews of the antidumping duty order on shrimp from China. Commerce in 2010 and 2011 originally found that Hilltop had not dumped merchandise into the U.S. market. Both determinations were challenged by an association of domestic shrimp producers, the Ad Hoc Shrimp Trade Action Committee (AHSTAC).

Represented by PKR, AHSTAC successfully obtained remand orders from the CIT in August 2011 and November 2012. The CIT ordered Commerce to reconsider its selection of Hilltop as a company to be reviewed and its calculation of duties in response to AHSTAC’s evidence, which included indicia of import fraud to evade antidumping duties. For the 2010-11 administrative review, AHSTAC in March 2012 submitted additional evidence indicating that Hilltop’s related U.S. importer had transshipped shrimp through Cambodia to evade duties. Commerce investigated and in September 2012 found that Hilltop failed to disclose its Cambodian affiliate. Commerce in December 2012 requested judicial permission to reconsider its findings that Hilltop had not dumped merchandise in light of the new evidence and agency findings. Such authorization was granted by the CIT in January 2013 and the Federal Circuit in May 2013 – creating precedent allowing Commerce to re-open the record in response to new evidence. Commerce thereafter applied statutory “adverse facts available” to assign Hilltop the 112.81% China-wide rate for both reviews. The CIT in July 2013 held that Commerce properly treated Hilltop as part of the China-wide entity based on noncooperation and material misrepresentation, but ordered remand to ensure that the 112.81% margin was sufficiently corroborated.

In the decision made public today, the CIT finds the 112.81% margin to be lawfully corroborated. Commerce properly used sales from another exporter during the original antidumping duty investigation requested by AHSTAC a decade ago. While Hilltop has already appealed to the Federal Circuit, the CIT decision creates strong precedent allowing Commerce to combat import fraud and impose consequences for material misrepresentation. Faced with such malfeasance in proceedings involving nonmarket economies, Commerce now has the recognized authority to treat those exporters as part of the NME-wide entity – based on an inability to trust any information submitted including claims of independence from government control – and to corroborate dumping margins using sales from other exporters made years earlier.

AHSTAC played a critical role in this achievement. When Commerce elected to re-open the records, the agency claimed that it only had the ability to do so because of the judicial challenges brought by AHSTAC; otherwise Hilltop’s lack of antidumping liability would have already been finalized. AHSTAC then provided Commerce with the transshipment evidence obtained from a criminal proceeding involving Hilltop’s related U.S. importer. Those in Commerce responsible for administering the antidumping laws were unaware that numerous federal agencies – including Commerce’s own National Oceanic and Atmospheric Administration – had extensively investigated and developed evidence regarding alleged shrimp transshipment by Hilltop’s related U.S. importer.

This case demonstrates the importance of coordinated approaches to the enforcement of trade remedies. Where importers and foreign producers respond to the imposition of antidumping duty orders with techniques to evade U.S. laws, domestic industries should endeavor to work with all government agencies having relevant jurisdiction so that such import fraud is detected and satisfactorily addressed.