Summary
The Federal Circuit held that the Department of Commerce may use the substantial transformation analysis to determine the country of origin of imported merchandise during scope inquiries, even when the goods are finished in a third country not named in the antidumping or countervailing duty order. The court rejected the Court of International Trade's conclusion that 19 U.S.C. § 1677j is the exclusive mechanism for addressing merchandise completed in third countries, and that the substantial transformation inquiry is not rendered superfluous by the circumvention statute. The imported oil country tubular goods, made from Chinese green tubes and finished in Indonesia, were finished OCTG, not unfinished, and could not be categorized as unfinished OCTG from China. The case was vacated and remanded to determine whether Commerce properly applied the substantial transformation analysis.
Topics
Practice areas
Questions Presented
- Whether the imported OCTG can be considered unfinished OCTG from China under the Orders.
- Whether Commerce may use the substantial transformation analysis to determine country of origin in scope inquiries, or whether it must use the circumvention inquiry under § 1677j.
Holdings
- The imported merchandise is finished OCTG, not unfinished, and cannot be categorized as unfinished OCTG from China.
- Commerce is entitled to use the substantial transformation analysis to determine country of origin before resorting to the circumvention inquiry.
Key quotations
“We conclude that Commerce is entitled to use the substantial transformation analysis to determine country of origin before resorting to the circumvention inquiry.” (11)
“The imported merchandise cannot be categorized as unfinished OCTG under the Orders because they are brought into the United States as finished OCTG.” (9)
“if Commerce applies the substantial transformation test and concludes that the imported article has a country of origin different from the country identified in an AD or CVD order, then Commerce can include such merchandise within the scope of an AD or CVD order only if it finds circumvention under § 1677j.” (13)
Factual background
The case concerns antidumping and countervailing duty orders on oil country tubular goods (OCTG) from China. OCTG are steel pipes used in oil drilling. To make OCTG, steel is first made into 'green tube,' which must be finished through heat treatment, threading, coating, and other processes. In 2010, Commerce issued AD and CVD orders covering OCTG from China, including both finished and unfinished OCTG. Bell Supply Company imports green tubes from China and arranges for them to be heat treated and finished in Indonesia. Customs determined that the finishing process substantially transforms the green tubes, changing their country of origin. However, Commerce in a 2014 Scope Ruling found that OCTG finished in third countries are still within the orders. The Trade Court vacated that ruling, leading to multiple remands. Ultimately, Commerce concluded that the language of the orders does not cover OCTG finished in third countries and that circumvention under 19 U.S.C. § 1677j does not apply.
Procedural history
Commerce issued AD and CVD orders on OCTG from China in 2010. After Customs determined that finishing OCTG in third countries substantially transforms the product, domestic steel companies requested a scope ruling. Commerce issued a Final Scope Ruling in 2014 finding that OCTG finished in third countries are still within the orders. Bell Supply challenged this ruling at the Trade Court, which vacated and remanded, holding that Commerce must apply the circumvention statute. On remand, Commerce again found the orders cover OCTG finished in third countries, but the Trade Court again vacated. On second remand, Commerce concluded that the orders do not cover OCTG finished in third countries and that circumvention does not apply. The Trade Court sustained that determination. Domestic Steel Companies appealed.
Remand instructions
We remand the case to the Trade Court to determine whether Commerce properly applied the substantial transformation analysis.