CIT Affirms Commerce’s Application of AFA to Chinese Shrimp Exporter

News & Insights
Jul 24, 2013

The Court of International Trade yesterday issued an opinion in a challenge to the final results of the 2009-10 administrative review of the antidumping duty order on shrimp from China.  The appeal was brought in 2010 by an association of domestic shrimp producers, the Ad Hoc Shrimp Trade Action Committee (AHSTAC).

Through PKR, AHSTAC successfully challenged Commerce’s selection of India as the surrogate market economy.  While the CIT ordered remand on this issue in 2012, it was not addressed by Commerce because the agency obtained permission to consider evidence made public in 2012 suggesting transshipment through Cambodia by a Chinese exporter to evade antidumping duties.

PKR on behalf AHSTAC obtained this evidence from a criminal prosecution related to mislabeled imported catfish and brought it to Commerce’s attention.  This evidence led Commerce to discover that a Chinese respondent, Hilltop, had misrepresented its affiliation with a Cambodian company.  As a result, Commerce on remand changed the antidumping duty rate for that respondent from 0% to the 112.81% China-wide rate through application of the “adverse facts available” (AFA) statute.  Hilltop challenged this determination. CIT Chief Judge Pogue affirmed Commerce having applied AFA to treat the respondent as part of the PRC-wide entity.  Commerce properly found that the respondent “significantly impeded this proceeding by submitting information containing material misrepresentations and inaccuracies.”  Because of the misrepresentation, all information submitted by the respondent – including its claim to be separate from the Chinese government – was “inherently unreliable.”

However, the CIT did not accept the 112.81% rate: “On remand, Commerce must either adequately corroborate the 112.81 percent rate and explain how its corroboration satisfies the {statute}, or else calculate or choose a different countrywide rate.”

Yesterday’s decision creates law further empowering Commerce to counter and deter misconduct in its proceedings.  Commerce can now confidently disregard information from respondents found to have committed material misrepresentation, and in NME cases treat them as subject to government control.  The opinion is a welcome addition to the growing CIT jurisprudence recognizing that Commerce may employ AFA to address impropriety in trade proceedings.  Whatever the ultimate rate assigned, the opinion vindicates Commerce for having investigated allegations of import fraud and applied AFA in response to documented misrepresentation.