NEWS

The U.S. Department of Commerce published in the Federal Register today its notice of initiation of the investigation of Urea Ammonium Nitrate Solutions from Russia and Trinidad and Tobago. 86 Fed. Reg. 40008. Of great significance is the fact that petitioners alleged that Russia functions as a non-market economy (NME) and that Commerce therefore should calculate the Russian exporters’ dumping margins on the basis of the NME methodology used primarily for China and Vietnam. The Notice makes it appear that Commerce will use both market economy and NME methodologies to calculate dumping margins, as it goes through the process of considering which category should apply.


This development means that the burden placed on the Russian exporters in this investigation will likely be heavy, as they will have to submit Normal Value data based on two different methodologies. But the implications are broader. If Russia is found to be a NME, this would be the first time that a country that had “graduated” to market economy status, as Russia did in 2002, would be returned to NME status. The impact would be felt not just for the specific product and exporters involved in the UANS investigation, but across all anti-dumping (and countervailing duty) proceedings involving Russia – including, for example, various steel and other fertilizer products. It has further implications for “suspension agreements” involving Russian exports, which were converted from NME to market economy architecture in the years after the 2002 determination. That range of cases and agreements will be impacted despite the fact that the Russian exporters and U.S. importers of such products are not participants, and have no standing as “interested parties,” in the current UANS investigation.


The broad impact of a market economy determination is one reason that Commerce, in 2001-02, opened a country-wide inquiry into Russia’s economic status – independent of any specific anti-dumping proceeding – and applied its determination prospectively when it determined that Russia should be treated as a market economy. Further, the market economy-vs.-NME determination is subject to a range of criteria, some economic and some quasi-political, which means that the decision can be swayed by geopolitical considerations. And to state the obvious, the United States’ geopolitical relationship with Russia is very different today from 2001-02. Finally, tucked away in U.S. anti-dumping law is a provision (19 U.S.C. § 1677(18)(D)) that Commerce’s determinations on NME status “shall not be subject to judicial review” – thus ensuring that such geopolitical/economic determinations are final.


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Neil Ellis was extensively involved in the negotiation of NME-based suspension agreements between Commerce and Russia in the late 1990s, and in the 2001-02 proceedings that resulted in Commerce’s decision to treat Russia as a market economy. For more information on the economic and political issues underlying NME status determinations, please contact us at neil@neilellislaw.com.

Recent developments in a lawsuit challenging a decision by the U.S. Department of Commerce suggest that opportunities may exist for reconsideration of Section 232 exclusion requests and denials.


To recall what we all already know: Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862, authorizes the President to undertake various actions, such as imposing tariffs and quotas on imports, in order to alleviate risks to the national security. In 2018, after a process conducted by the U.S. Department of Commerce, the President adopted tariffs and quotas on imports of a broad range of steel and aluminum products from a broad range of countries. Further, Commerce set up a process whereby importers can apply for exclusions from the tariffs for individual steel and aluminum products, and domestic producers can oppose such applications. Thousands of exclusion applications have been submitted, some have been granted, and many have been denied due to domestic opposition. Finally, many lawsuits have been commenced in the U.S. Court of International Trade, challenging both the imposition of the Section 232 tariffs and the Department’s refusal to grant exclusions. Most of the lawsuits have failed, but a few have not.


In one pending case, Maple Leaf Marketing challenged Commerce’s denial of two exclusion requests on a number of grounds, procedural, factual, and constitutional. On June 22, a three-judge panel granted the Government’s motion to dismiss all of Maple Leaf’s allegations except one, which focused on the facts underlying Commerce’s evaluation of the exclusion request and the opposition filed by a domestic producer. Maple Leaf Marketing, Inc. v. United States, Slip Op. 21-77.


Facing litigation on the remaining claim, the Government, on July 20, filed a consent motion for voluntary remand to permit Commerce to reconsider its denial of Maple Leaf’s exclusion request. Its motion recognized that in another recent case, JSW Steel, Inc. v. United States, 466 F. Supp. 3d 1320, 1330 (Ct. Int’l Trade 2020), the Court had found that Commerce’s denials of the exclusion requests at issue were “devoid of explanation and frustrate judicial review.” The Government also noted that the Bureau of Industry and Security (the office within Commerce that administers the Section 232 programs) had engaged in communications with individual parties in Section 232 proceedings, without preparing contemporaneous documentation of such contacts. “A remand for Commerce to reconsider the original exclusion requests and submissions will eliminate any potential disputes about the completeness of the current record.” Defendants’ Consent Motion for Voluntary Remand, Court No. 20-00125, at 4 (July 20, 2021).

Thus, on both substantive and procedural grounds, the Government justified the need for reconsideration of the denial of Maple Leaf’s exclusion application. The Court granted the motion on the same day. It set a deadline of October 18 for Commerce to file the results of its remand.

In its motion for remand, the Government noted that there are over 19,000 pending exclusion requests, and over the past three years thousands of such requests have been denied. For importers whose requests have been denied, it may be worthwhile evaluating the factual record and circumstances surrounding the denial to determine if grounds exist to challenge or seek reconsideration of Commerce’s decision. Likewise, for importers with pending exclusion requests, opportunities may exist to ensure that an adequate record is developed for Commerce’s decision and that appropriate processes are followed.

For questions regarding the Section 232 process and litigation options, please contact us at neil@neilellislaw.com.

The Court of Appeals for the Federal Circuit issues relatively few substantive decisions within its trade jurisdiction, and a month or more can pass without a single precedential decision in that field. So it was unusual that three precedential trade decisions were issued on consecutive days during the past week – TransPacific Steel LLC v. United States (No. 20-2157) on Tuesday, TR International Trading Co. v. United States (No. 20-1830) on Wednesday, and Stupp Corp. v. United States (No. 20-1857) on Thursday. This note addresses the first two; analysis of the third opinion, while interesting, will have to wait.


Considering the first two opinions, TransPacific immediately looks important, while TR International appears narrow and technical. But when considered through the prism of litigation planning for U.S. importers, the latter opinion is at least as important as the former.


The importance of TransPacific is evident because it confronts questions of the balance of power among the branches of government. In particular, the Court of Appeals was asked to interpret an expansive statutory delegation of authority to the Executive Branch in light of the U.S. Constitution’s vesting the Legislature with exclusive authority to regulate foreign trade and impose taxes and tariffs. U.S. Const., Art. I, § 8. As we have all learned over the past few years, Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862, delegated authority to the President to take a range of trade-related actions in order to alleviate a threat to the national security posed by imports. Both the term “national security” and the range of actions that the President may take are broadly defined. But the statute spells out in detail the procedures to be followed and deadlines that “shall” be met, before such actions may be taken. In its simplest terms, the question in TransPacific is whether those deadlines are mandatory.


In reaching a negative answer to that question, the majority opinion attempted to avoid potential constitutional issues by carefully parsing the statutory language and legislative intent. The opinion rested, in part, on the meaning of the word “action” as found in the statute – as distinguished from the word “act” – and on the intent of Congress in amending the Act in 1988, where the legislative history made clear the Congressional frustration with Presidential inaction in previous cases. Judge Reyna, in dissent, addressed the constitutional issues directly, by arguing that, in light of the Constitution’s vesting of trade regulatory authority in the Legislative Branch, Congressional delegations of that authority to the Executive Branch should be interpreted narrowly. Relying on this underlying principle, the dissent dismissed the majority’s interpretation of the law as “statutory leapfrog, hopping here and there but ignoring what it has skipped.” Slip Op. at 56.


The importance of TransPacific is indisputable in terms of broad issues of the relations among the three branches of government in the regulation of trade. However, the practical significance of the Court’s decision in TR International should not be overlooked. Here, the Court of Appeals broke no new ground, but reaffirmed its consistent position that jurisdiction for judicial review of the trade agencies’ decisions cannot be invoked through the “residual” provision of 28 USC § 1581(i) when direct substantive review options exist.


TR International involved a determination by U.S. Customs and Border Protection that the processing of a food additive (citric acid) in India was not sufficient to establish Indian country of origin. Because the country of origin of the primary input was unknown, CBP presumed that it was of Chinese origin – and hence subject to the U.S. anti-dumping and countervailing duty orders (and tariffs) on Citric Acid from China. The importer challenged CBP’s determination both by protest and launching a lawsuit pursuant to the Court of International Trade’s residual jurisdiction under Section 1581(i), claiming, inter alia, that CBP’s actions were ultra vires and procedurally defective. The Court of International Trade dismissed the lawsuit, and the Court of Appeals affirmed.

The Court noted that other avenues for judicial review were available and that 1581(i) “‘may not be invoked when jurisdiction under another subsection of [section] 1581 is or could have been available, unless the remedy provided under that other subsection would be manifestly inadequate’.” Slip Op. at 6 (quoting Sunpreme Inc. v. United States, 892 F.3d 1186, 1191 (Fed. Cir. 2018)). Here, the Court noted that the denial of a protest may be subject to judicial review under subsection (a) of Section 1581. Likewise, to the extent that the importer was challenging a finding that the Indian merchandise fell within the “scope” of the Citric Acid orders, the Court of Appeals noted that the Department of Commerce has the authority to interpret the scope of anti-dumping and countervailing duty orders, and that scope rulings are also expressly subject to judicial review under subsection (c) of Section 1581.


In light of this well-established precedent, it is important, when preparing a litigation strategy, to identify the correct jurisdictional bases and to remain aware of the applicable deadlines for judicial review. Although the timing issue did not arise in TR International, jurisdictional deadlines cannot be extended, and residual jurisdiction cannot be invoked to elide the expiration of deadlines under the proper jurisdictional bases. In light of the increasingly expansive application of circumvention and scope determinations by Commerce and CBP’s increasingly rigorous application of duties on entries, this lesson is as important as the separation of powers issue handled by the Court in TransPacific.