[00:00:00] Speaker 04: Gentlemen, we have four cases on the calendar this morning, and surprise, surprise, no patent cases. [00:00:17] Speaker 04: Two cases from the Court of International Trade, which are related, and two cases from the Merit Systems Protection Board, one of which is being submitted in the briefs [00:00:29] Speaker 04: and will therefore not be argued. [00:00:32] Speaker 04: The first case is Diamond Saw Blades versus the United States, et al. [00:00:39] Speaker 04: 2016, 1253, Mr. Neely. [00:00:51] Speaker 02: Good morning. [00:00:52] Speaker 02: May it please the court. [00:00:52] Speaker 02: I'm Jeffrey Neely of Hush Blackwell, and I'm here today on behalf of the Gagnon companies and the AT&M entity. [00:01:00] Speaker 02: I'd like to begin by making clear what this appeal is about and what it's not about. [00:01:05] Speaker 02: The government has set up some straw men and knocked them down, but it has stated the obvious about some past cases under different facts. [00:01:14] Speaker 02: But we do not think that it has addressed the facts in law with regard to this case. [00:01:19] Speaker 02: The question here is what happens [00:01:21] Speaker 02: when the record indicates that there is only one state-owned entity in China, where there's no dispute that that entity has cooperated in the review, where commerce has made an explicit finding that there is no failure to cooperate, not only by that entity, but by any member of the PRC-wide entity. [00:01:43] Speaker 05: Let me ask you a question, though. [00:01:44] Speaker 05: You said there's only one entity. [00:01:48] Speaker 05: Commerce did talk about a collective entity. [00:01:51] Speaker 05: But it referred to 21 other organizations. [00:01:54] Speaker 05: Are you saying those organizations don't exist anymore? [00:01:58] Speaker 02: No, I'm not saying that at all. [00:01:59] Speaker 05: All right. [00:02:00] Speaker 05: So are you saying that the one entity is the ATM entity? [00:02:04] Speaker 02: Well, the entity that we're analyzing is the PRC-wide entity, I think, quite clearly. [00:02:11] Speaker 02: And the issue, and we think this is clear, and I think we're actually in agreement with the government on that, that the question is what rate applies to the PRC-wide entity. [00:02:19] Speaker 05: And you're not arguing as to the [00:02:21] Speaker 05: some of the amici that they can't use a PRC-wide entity, right? [00:02:27] Speaker 02: No, we don't think you need to reach that in this case. [00:02:30] Speaker 02: Okay. [00:02:30] Speaker 02: Because what we have is, the reason I say that there's one entity is I'm saying in this particular case, on the facts of this particular, on the record of this particular case, the AT&M entity and the PRC-wide entity are one and the same. [00:02:49] Speaker 02: And let me tell you why I think that. [00:02:51] Speaker 05: And that goes to your argument where you say they can't incorporate their findings from the prior investigation? [00:02:58] Speaker 02: Yes, it's related to that, but it goes more directly, first of all, to the issue of the 21 companies. [00:03:07] Speaker 02: I think that looking at the record is probably the best way to approach this. [00:03:12] Speaker 02: Always the best way to approach this. [00:03:14] Speaker 02: I think so. [00:03:16] Speaker 02: So if we take a look at [00:03:18] Speaker 02: Our Section A response, which is of May 10, 2001, of Gung Yong and the AT&M entity, which is the joint appendix at 170 to 171. [00:03:29] Speaker 02: In response to question two of that questionnaire, my client provided information on who it's related to and who it's not. [00:03:40] Speaker 02: On page A4 of that response at Roman Small Four, we explicitly stated, quote, [00:03:47] Speaker 02: There is no relationship with any other exporter or producer, and there is no sharing of managers or owners." [00:03:56] Speaker 02: End of quote. [00:03:58] Speaker 02: This statement is undisputed on the record evidence. [00:04:02] Speaker 01: I'm really quite confused about what point you're making, which I think Judge O'Malley was getting at too, that in this case, [00:04:13] Speaker 01: We can ignore the 21. [00:04:16] Speaker 01: We can ignore, I don't know how many else might have been part of the PRC entity because, are you saying, because ATM is organizationally actually related to everything in the PRC entity. [00:04:31] Speaker 02: No, what I'm saying is that there's only one producer. [00:04:35] Speaker 02: We're talking about the diamond saw blades industry after all, okay? [00:04:37] Speaker 02: I mean, that's the PRC wide entity we're talking about, right? [00:04:41] Speaker 02: There's only one producer. [00:04:44] Speaker 02: of diamond saw blades that is owned or controlled by the government of China. [00:04:49] Speaker 02: And that is the AT&M entity. [00:04:52] Speaker 02: That's what we said on the record. [00:04:54] Speaker 01: That is what... Is that where you were just... That's why I was just referring to your... So where does it say no producer in... No government controlled... There's no government controlled producer of this product except AT&M. [00:05:12] Speaker 02: Well, what we say is that we're not related to any other producer or exporter, which means the same thing. [00:05:18] Speaker 05: I don't think it does mean the same thing. [00:05:20] Speaker 05: I'm sorry. [00:05:20] Speaker 05: I thought the position you took is that you weren't government controlled. [00:05:24] Speaker 02: Well, initially, we did. [00:05:26] Speaker 02: We agreed that we did not believe that we were government controlled. [00:05:30] Speaker 02: Court of International Trade disagreed with that. [00:05:33] Speaker 02: This court affirmed it. [00:05:35] Speaker 02: So that issue's off the table. [00:05:37] Speaker 05: But isn't that, I mean, you're missing, I think, the point. [00:05:41] Speaker 05: You don't have to be related at this level to be related in this umbrella, right? [00:05:46] Speaker 05: In other words, once you're government controlled, then everyone else that's government controlled is related by definition, correct? [00:05:58] Speaker 02: Yes, but that's the point of what we said here. [00:06:00] Speaker 02: There's nobody else that's related to us. [00:06:03] Speaker 02: There are no other diamond saw blade companies in China that are related [00:06:10] Speaker 02: to our companies. [00:06:12] Speaker 05: Are related to what? [00:06:14] Speaker 02: To the government? [00:06:15] Speaker 02: To the AT&M entity. [00:06:17] Speaker 05: But once you're related to the government, the question is whether the other diamond saw blade companies are also related to the government, correct? [00:06:24] Speaker 02: We've said that we are not related to anybody else. [00:06:28] Speaker 02: And if it were the case, your honor, if it were the case that there were other diamond saw blade companies out there that were related to the government, that would be a false statement. [00:06:41] Speaker 02: Okay, because we would be related to them. [00:06:44] Speaker 02: We said we were not, and that has not been disputed. [00:06:48] Speaker 05: But you're saying you disagree with Commerce's conclusion that you were government controlled. [00:06:55] Speaker 02: No. [00:06:56] Speaker 02: No, I mean, that's passed. [00:06:58] Speaker 02: That's over. [00:07:00] Speaker 02: That issue has been resolved. [00:07:01] Speaker 02: We're not disputing that whatsoever. [00:07:03] Speaker 02: I think that the government would like us to [00:07:06] Speaker 02: be relitigating that case. [00:07:08] Speaker 02: We're not relitigating that case. [00:07:09] Speaker 02: We're saying, OK, we're government controlled. [00:07:11] Speaker 02: That's fine. [00:07:12] Speaker 02: Now that we're government controlled, let's look at the relationship of our company to other companies that might be government controlled. [00:07:21] Speaker 02: Fair enough. [00:07:22] Speaker 02: We're fine. [00:07:23] Speaker 02: Let it get out of that case, we lost it. [00:07:26] Speaker 02: Now we're here and we're saying, let's take a look at who we're related to. [00:07:30] Speaker 02: The record says we're not related to anybody else. [00:07:34] Speaker 02: And anybody else means [00:07:36] Speaker 02: owned by the government or not owned by the government. [00:07:38] Speaker 01: It means anybody. [00:07:39] Speaker 01: When you submitted the document that you were reading from, were you contending that you were not government controlled at the time you submitted that document? [00:07:48] Speaker 02: We were not contending it, but it doesn't really matter. [00:07:51] Speaker 02: Not controlled, not related is not related. [00:07:55] Speaker 01: That's all. [00:07:55] Speaker 01: That's what I'm saying. [00:07:56] Speaker 01: Here's what I find surprising. [00:07:58] Speaker 01: I had taken it that this document says [00:08:02] Speaker 01: you're not related to any other producer of diamond saw blades in the ordinary sense. [00:08:07] Speaker 01: That didn't mean that, and the government does not have to conclude, it does mean that there are no other government controlled diamond saw blades producers in China. [00:08:18] Speaker 01: Just because time is short. [00:08:22] Speaker 01: Can you proceed at least to address whether you have an argument for, whether you have an argument on the assumption that [00:08:32] Speaker 01: there are, in fact, other, like 21 other, producers of diamond saw blades, government control, it turns out, that are not... I guess... Okay, yeah, I mean, I think there were other errors. [00:08:48] Speaker 01: That is one error, but one... I thought that the gist of your argument, in part because I was putting aside the other thing, was that the rate that you were given here is based in part on an adverse inference [00:08:59] Speaker 01: based on conduct not within the first administrative review period. [00:09:03] Speaker 01: And that's inadmissible. [00:09:06] Speaker 02: Absolutely. [00:09:06] Speaker 02: That's one of our arguments. [00:09:08] Speaker 02: And I think there are a number of errors here. [00:09:09] Speaker 02: And one of our arguments is that, and this goes to the Abel-Moran case, where this court said recently, as I'm sure you're well aware, that you can't bring in information from outside that's non-record evidence. [00:09:25] Speaker 02: And that's what they've done here, among other things. [00:09:29] Speaker 02: evidence that was on the record of this case, which was the 0.15% and the 164%, which was an adverse rate, and combine them to come up with this 80-some percent rate, 82% rate. [00:09:43] Speaker 02: So that, we believe, is erroneous also based on that recent case. [00:09:49] Speaker 05: If the 164 were appropriately considered, so say we reach the conclusion that because it was at an earlier [00:09:57] Speaker 05: part in the investigation that the Commerce could appropriately consider it. [00:10:01] Speaker 05: Is there anything about the methodology about the averaging that you object to? [00:10:08] Speaker 02: Well, it's a simple average, Your Honor. [00:10:10] Speaker 02: I mean, there's one, two numbers divided by two. [00:10:14] Speaker 02: So in that sense, there's no methodological problem. [00:10:18] Speaker 05: You just think it's the 0.15 rate is where we should be. [00:10:22] Speaker 02: Well, we think that for a number of reasons. [00:10:24] Speaker 02: But one is that the 164% rate [00:10:28] Speaker 02: is not on the record. [00:10:29] Speaker 02: We had no ability to challenge whether that rate is an appropriate rate here on the record of this case, which is we believe to be contrary to laws we set out in our briefs. [00:10:41] Speaker 02: So yes, we think there's a huge problem with that number. [00:10:45] Speaker 05: Well, you knew that's the number they had come up with the first time around, right? [00:10:52] Speaker 02: The first time around, meaning? [00:10:53] Speaker 01: In the original investigation, that was the PRC entity rate. [00:10:56] Speaker 02: Well, in the first, in the original part of the investigation, we didn't care because we were found to be entitled to a separate rate. [00:11:03] Speaker 02: So we certainly didn't challenge it. [00:11:05] Speaker 02: No. [00:11:06] Speaker 02: I mean, that was a completely different world. [00:11:10] Speaker 02: That was, that was using the old methodology that Commerce was using. [00:11:13] Speaker 02: And they said, you're entitled to a separate rate. [00:11:15] Speaker 05: So we certainly... But when it became clear that Commerce believed that you hadn't established that you were sufficiently independent from the PRC-wide entity, [00:11:25] Speaker 05: Didn't you at least have noticed that you were being threatened with this 164? [00:11:30] Speaker 05: I mean, that's where you could have ended up. [00:11:32] Speaker 02: The average is... Oh yeah, we absolutely were aware and we challenged it. [00:11:36] Speaker 02: I mean, that was what happened during the remand before the Commerce Department. [00:11:41] Speaker 05: But I thought you just said to me you didn't have any opportunity to challenge it. [00:11:45] Speaker 02: No, no, we didn't have any opportunity. [00:11:47] Speaker 02: We objected on legal grounds to the 164%. [00:11:52] Speaker 02: We didn't have an opportunity to go behind it and find out how it was calculated to see if that could have been a sensible rate. [00:12:00] Speaker 02: And remember, Your Honor, that the Commerce Department... Did you ask for that opportunity? [00:12:06] Speaker 05: We had a remand. [00:12:07] Speaker 02: Yeah, yeah. [00:12:08] Speaker 02: I mean, we commented to Commerce and said that it's inappropriate. [00:12:12] Speaker 02: And one of the reasons was that it wasn't on the record. [00:12:15] Speaker 02: Yes. [00:12:15] Speaker 02: But you said you didn't have a reason to challenge it because you had a separate rate. [00:12:20] Speaker 02: No, no, I'm talking about in the original, we're confusing two things, sir, I believe, your honor. [00:12:25] Speaker 02: When we had no reason to challenge it, I'm talking about the original investigation, which I believe was what the question was. [00:12:31] Speaker 02: What I'm talking about, about our challenging it was in the remand to the, uh, to the court of international trade in more recently in, in, of which this is part of the appeal. [00:12:44] Speaker 05: So we're talking about two different plans. [00:12:45] Speaker 05: Right. [00:12:45] Speaker 05: So when you had a remand, you didn't, [00:12:47] Speaker 05: asked to, as you say, go behind it and challenge the merits of that 164 determination? [00:12:52] Speaker 02: We said it wasn't on the record, so yes, we did challenge it. [00:12:55] Speaker 05: Well, you challenged the fact that it wasn't on the record. [00:12:57] Speaker 05: Did you challenge the substantive conclusion of 164? [00:13:00] Speaker 02: It wasn't on the record, so we didn't have any basis to say anything about it. [00:13:06] Speaker 02: I mean, how could we challenge it if it's not on the record? [00:13:09] Speaker 01: In the first administrative review, it was from the beginning an issue [00:13:16] Speaker 01: whether you were going to stay separate or were going to be put into the PRC entity, right? [00:13:21] Speaker 01: Because you have to justify your continuing independence. [00:13:25] Speaker 01: What did you think was going to happen if you lost on that? [00:13:29] Speaker 01: And whether you were independent or not? [00:13:32] Speaker 02: We thought that they should then look at the facts before the court. [00:13:38] Speaker 02: There were totally separate issues. [00:13:42] Speaker 02: Our client chose not to address and to raise the issue of the 164% or whatever rate was applicable in the appeal earlier. [00:13:54] Speaker 02: There was no reason to do that. [00:13:56] Speaker 02: This was the first time. [00:13:57] Speaker 02: In this case, it's the first time that this came up. [00:14:01] Speaker 02: And what we thought would happen is actually that the Commerce Department would follow the law, which is to look at the record, to take a look at what rate applies [00:14:11] Speaker 02: to the PRC-wide entity. [00:14:13] Speaker 02: And in fact, what happened was that the Commerce Department explicitly said in this first review that there's been no failure to cooperate by the PRC-wide entity. [00:14:25] Speaker 01: Yet they used an AFA rate. [00:14:26] Speaker 01: On that point, can I ask you about something that you explicitly say in your brief? [00:14:32] Speaker 01: Sure. [00:14:32] Speaker 01: You say that Commerce found that the 21 companies were part of the PRC-wide entity in the preliminary results of this review. [00:14:41] Speaker 01: only based on their failure to cooperate. [00:14:44] Speaker 01: So why is that not... I haven't actually found the record support for that, but you say it in your brief. [00:14:53] Speaker 01: Why is that not sufficient to allow them, Commerce, to invoke 1677-EB, namely to draw an adverse inference because parts of the PRC entity failed to cooperate not before, but now. [00:15:10] Speaker 01: No lack of contemporaneousness problem. [00:15:17] Speaker 01: Those 21. [00:15:18] Speaker 02: Well, the 21 companies failed to respond to the initial part. [00:15:26] Speaker 01: Is that a failure to cooperate that triggers the adverse inference B provision? [00:15:34] Speaker 02: Yes, at that time. [00:15:35] Speaker 02: But here's what I think we need to take into account. [00:15:40] Speaker 02: This court in the Ruten case talked about how presumptions work. [00:15:45] Speaker 02: And what they said was this, quote, a presumption completely vanishes upon the introduction of evidence sufficient to support a finding of the nonexistence of the presumed fact. [00:15:58] Speaker 02: That evidence that we're talking about is the evidence that we pointed to, that I pointed to a moment ago from the May 1st [00:16:08] Speaker 02: where we said we're the only company in China that makes diamond saw blades. [00:16:15] Speaker 02: And we raised that with commerce back in the initial part. [00:16:20] Speaker 02: We raised it again. [00:16:21] Speaker 02: In this case, we've raised the time and again, raised it with the court below. [00:16:26] Speaker 05: So you're saying the other 21 companies don't exist anymore? [00:16:30] Speaker 05: No, I'm not saying that. [00:16:31] Speaker 05: I'm not understanding this. [00:16:32] Speaker 02: OK, well, I'll tell you. [00:16:33] Speaker 02: What I'm saying is this, the 21 companies [00:16:36] Speaker 02: exist, they're not related to us. [00:16:39] Speaker 05: Forget about relatedness. [00:16:41] Speaker 05: Are there 21 other companies that exist that are involved in the diamond saw blade business? [00:16:50] Speaker 02: There are 21 other companies that exist and we have no earthly idea because the record doesn't show it whether they're involved in the diamond saw blades industry or not. [00:16:59] Speaker 05: So your statement that you're the only one, you have no idea whether that's true or not. [00:17:06] Speaker 05: You're saying we're supposed to be bound by that, that that's supposed to do away with the presumption, yet you admit that you don't even know if that's true. [00:17:13] Speaker 02: No, I'm not admitting that. [00:17:14] Speaker 02: Because I don't think we are the only diamond saw blades company that is owned or controlled by the Chinese government. [00:17:23] Speaker 04: Mr. Neely, you've consumed your time, but we'll give you three minutes of rebuttal back. [00:17:29] Speaker 04: I'm sorry? [00:17:30] Speaker 04: We'll give you three minutes of rebuttal back. [00:17:32] Speaker 04: OK, great. [00:17:33] Speaker 02: Thank you very much. [00:17:36] Speaker 03: With respect to the question of whether there's any planning as to whether these 21 companies still exist or not, we direct the Court's attention to page 27 and page 138 of the Joint Appendix. [00:17:58] Speaker 03: which was, they seem to be copies of the same demand redetermination from Commerce, and Commerce makes reference to the 21 companies still existing, and ATM now being the 22nd company. [00:18:12] Speaker 03: There was not a reinvestigation of the scope of the industry in this review. [00:18:17] Speaker 03: There were not additional questionnaires sent out to these 21 companies, again, seeking to determine their commercial activities. [00:18:25] Speaker 03: Instead, Commerce [00:18:26] Speaker 03: selected two mandatory respondents, one was ATM, one was the way high company, which is the party in the 1254 case. [00:18:33] Speaker 01: So can I just focus on this? [00:18:39] Speaker 01: Mr. Neely in his brief said at page 40 and counterpart in the second case we're about to hear, that the 21 companies were [00:18:51] Speaker 01: stripped of their separate rate status and put into the PRC entity because of a failure to cooperate. [00:19:00] Speaker 01: Is that true? [00:19:01] Speaker 01: What's the documentary support of it? [00:19:03] Speaker 01: Because that might be relevant to whether you can invoke, if you need to invoke, 1677-EB. [00:19:16] Speaker 03: Our understanding is, and commerce says this at page 27 of the Joint Appendix, is that the PRCYN is subject to review in the underlying proceeding because of the companies on which the review is initiated. [00:19:26] Speaker 03: 21 companies failed to demonstrate a lack of de jure and de facto control, and therefore did not receive a separate rate. [00:19:32] Speaker 03: That was part of the investigation. [00:19:34] Speaker 01: And that carried forward the review. [00:19:37] Speaker 01: So just to be clear, it is in my mind, and tell me if this is wrong, a different thing [00:19:45] Speaker 01: to say they failed to cooperate from saying they failed to show that they were independent of the Chinese government. [00:19:53] Speaker 01: My understanding is... The second would not trigger all by itself the adverse inference provision. [00:19:58] Speaker 01: The first would. [00:19:59] Speaker 01: My understanding is there was a failure to cooperate in the investigation. [00:20:02] Speaker 01: Your understanding. [00:20:03] Speaker 01: So what in the record would say that? [00:20:05] Speaker 03: It's on the record of this review. [00:20:07] Speaker 03: It's on the record of the investigation. [00:20:10] Speaker 03: really my understanding of what was in the investigation. [00:20:13] Speaker 03: What was carried over from the investigation was the PRC-wide rate, which was from the Federal Register of Notice. [00:20:20] Speaker 03: It was not an independent reinvestigation of the investigation as part of the record of this review. [00:20:27] Speaker 01: So right now you're not aware of any failure to cooperate by the 21 companies [00:20:33] Speaker 01: in the first administrative review. [00:20:36] Speaker 01: No, and they weren't asked to cooperate. [00:20:38] Speaker 01: They weren't asked questions by commerce in this. [00:20:41] Speaker 01: This is so important. [00:20:42] Speaker 01: I'm going to just keep asking until I'm absolutely sure what I can rely on. [00:20:46] Speaker 01: What he says on page 40 of his brief, you're saying is false. [00:20:49] Speaker 01: And that's a really good thing for him, that it's false. [00:20:54] Speaker 01: What was the statement on page 40 that... That there were 21 companies, part of the PRC entity, that failed to cooperate in this administrative review. [00:21:05] Speaker 03: In the investigation, there was failure to cooperate. [00:21:09] Speaker 03: There was the average inference of 164% rate. [00:21:10] Speaker 03: There was not a separate investigation by commerce. [00:21:15] Speaker 03: They didn't send questionnaires to these companies that those companies chose not to respond to as part of this review. [00:21:22] Speaker 03: In terms of... [00:21:23] Speaker 03: their legal argument that this means that there is a failure to cooperate on the record of this review under 1677E, we just want to make clear we don't think that's a requirement for commerce to carry forward the rate from the investigation forward. [00:21:40] Speaker 01: I think I understand. [00:21:41] Speaker 01: Your argument is never mind 1677EB. [00:21:47] Speaker 01: I'm not sure I'd buy that, but it's a substantially more difficult question, it seems to me, than if you could say there was, as he says on page 40, a failure to cooperate of pieces of the PRC entity in this review, then you could rely on 1677-EB. [00:22:07] Speaker 03: We are not relying on 1677-EB because there were questionnaires sent to those companies that those companies failed to respond to in this review. [00:22:15] Speaker 03: happened in the investigation, not here. [00:22:18] Speaker 05: Okay, so as I understand, I'm looking at the pages that you cited us to, which the language is identical. [00:22:23] Speaker 05: So it says, the PRC-wide entity is subject to review in the underlying proceeding because of the companies on which the review was initiated. [00:22:32] Speaker 05: Twenty-one companies failed to demonstrate a lack of de jure and de facto control and therefore did not receive a separate rate. [00:22:39] Speaker 05: Right? [00:22:40] Speaker 03: Yes. [00:22:40] Speaker 05: And you're saying that that failure to establish a right to a separate rate was in the earlier investigation. [00:22:47] Speaker 03: Yes. [00:22:48] Speaker 05: And then you say the ATM entity is now the 22nd company found not to be entitled to a separate rate and joins the other companies in the PRC-wide entity under review. [00:22:58] Speaker 03: Yes. [00:22:59] Speaker 05: And so you're saying that to the extent there was, for whatever reason, whether it was lack of cooperation or not, they were never entitled to a separate rate. [00:23:11] Speaker 03: Right. [00:23:12] Speaker 03: And? [00:23:13] Speaker 03: Initially, commerce had found ATM was. [00:23:15] Speaker 03: Then, after litigation, eventually reached this court. [00:23:19] Speaker 03: ATM is not eligible for a separate rate. [00:23:21] Speaker 03: So now ATM is also part of the PRC wide edit. [00:23:24] Speaker 05: Can you respond to the argument that there is no evidence that those other companies actually engage in diamond saw blade production or activity? [00:23:39] Speaker 03: That's a pretty bold statement. [00:23:41] Speaker 03: And there's no evidence on this record that would support that presumption. [00:23:47] Speaker 03: There were not questionnaires sent back to these companies to follow up, hey, tell us how much you're selling during this period so we can make a weighted average comparison or something like that. [00:23:56] Speaker 03: That didn't happen. [00:23:57] Speaker 03: They did not reinvestigate those companies. [00:23:59] Speaker 03: They carried over the rate from the investigation. [00:24:02] Speaker 03: So we do not have data on this record of how many shipments that these companies were making during this period because that wasn't reinvestigated. [00:24:11] Speaker 05: Once ATM submits a document that says, we're the only entity in China [00:24:17] Speaker 05: that is controlled by the government and that is involved in the diamond saw blade business, whether that's completely false or not. [00:24:26] Speaker 05: But once they make that statement, what's commerce's obligation in response? [00:24:31] Speaker 03: Commerce can choose to investigate what companies it chooses to investigate. [00:24:35] Speaker 03: In this case, they investigated two companies, ATM and Weihai. [00:24:39] Speaker 03: And they can choose their respondents. [00:24:41] Speaker 03: They don't have to send out questionnaires to re-investigate all of the commercial data for the entire People's Republic of China every year. [00:24:49] Speaker 03: They don't have to do that. [00:24:51] Speaker 03: So they're within their discretion to choose to re-investigate these two companies. [00:24:55] Speaker 03: When they got the information they got from ATM and they ultimately were determined to be part of the PRC-wide entity, Commerce chose to incorporate this knowledge because they initially had calculated a separate rate for them into their [00:25:09] Speaker 03: calculations of the PRC wide entity and cut that rate in half. [00:25:13] Speaker 03: That was a benefit to ATM compared to what it would have been under the default rule in other cases such as I believe lying paper and off-the-road tires. [00:25:23] Speaker 05: So the cars could have just stuck with the 164 rate. [00:25:27] Speaker 03: It would have been consistent with their practice in other cases. [00:25:30] Speaker 05: Under what regulations did they engage in the averaging or was it just a gift? [00:25:36] Speaker 03: Averaging was not the product of any regulation. [00:25:38] Speaker 03: 19 CAFR 351.107 says that the rebuttable presumption is that you're part of the statewide entity until you prove otherwise. [00:25:48] Speaker 03: In cases such as Line Paper and Off the Road Tires, Commerce has said, well, if you are not part of the, if you're part of the PRC, well, I know your rate could be treated as irrelevant, and you just get the PRC-wide rate. [00:26:00] Speaker 03: In this case, Commerce, because they had gone through and [00:26:03] Speaker 03: calculate an individual rate for them, decided to incorporate that additional information and average it, but they were under no obligation to do so. [00:26:11] Speaker 03: There's no regulation that says, oh yes, if a company that previously got a separate rate, all of a sudden after litigation in the court is determined to be part of the PRC wide entity, you do an average. [00:26:23] Speaker 03: Or what kind of average? [00:26:25] Speaker 03: It doesn't say that. [00:26:27] Speaker 03: Commerce made a determination based upon [00:26:30] Speaker 03: this additional information they got about the PRC-wide entity, but they were not under an obligation to do so. [00:26:50] Speaker 03: I believe ATM had said in their papers, well, you could have just asked us. [00:26:54] Speaker 03: We could have asked these other 21 companies what they were doing. [00:26:58] Speaker 03: We'd tell you if they were affiliated with us. [00:27:01] Speaker 03: Again, commerce isn't obligated to reinvestigate every single company, and they're not obligated to take ATM's word for it as to what the 21 other companies are doing. [00:27:11] Speaker 03: So again, that is not an obligation that commerce has as part of the review process. [00:27:17] Speaker 03: Also, given that it is the first review where they're actually fixing the actual cash deposit rate that's going to be used, it was a reasonable exercise of commerce's discretion, given this individual situation where you had a company that had qualified for a separate rate and then lost it to incorporate the commercial information about that entity into the PRC-wide rate. [00:27:42] Speaker 03: But as the Court of International Trade correctly held, [00:27:46] Speaker 03: Congress wasn't under an obligation to do so, and its review of the PRC-wide rate under 1675A permitted it to do so under the facts of this review. [00:28:02] Speaker 04: Anything further, Mr. Toto? [00:28:04] Speaker 03: No, Your Honor. [00:28:05] Speaker 04: Well, I will hear from Mr. Pickard, who has two minutes. [00:28:14] Speaker 00: Good morning, Your Honors. [00:28:17] Speaker 00: This issue has been thoroughly briefed. [00:28:19] Speaker 00: So I think with the court's permission, I would just offer one observation and then obviously happy to answer any questions that you may have. [00:28:29] Speaker 00: The basic NMA non-market economy methodology has been approved by this court for 20 years. [00:28:41] Speaker 00: What I'd just like to do is take one minute to make an observation in regard to the very purpose of the methodology. [00:28:48] Speaker 00: Basically here, we know that there are at least 21 entities that have been found to be owned and controlled by the government of China. [00:28:57] Speaker 00: The purpose of creating a PRC entity-wide rate is to make sure that no entity that's controlled by the government of China [00:29:07] Speaker 00: ends up being essentially a tunnel for exports to the United States, so that there's no manipulation of the system, either by having one company have a particularly low rate so all the other companies funnel through them, or attempt to have just one of those entities participate to a limited degree, get a lower rate, and then have that apply to the entire PRC entity. [00:29:32] Speaker 00: That's the purpose behind it that's been upheld for 20 years. [00:29:36] Speaker 00: What the appellant is asking for in this case flies in the face of the very purpose of it, to create an opportunity for one company to potentially game the system and then end up being an export or an avenue for other companies to either funnel their exports through or their limited participation to bring the rate down for everyone. [00:29:59] Speaker 00: So just from kind of a policy and a purpose perspective, [00:30:04] Speaker 00: what's Helen is asking for now would frustrate the very existence of this basic methodology. [00:30:12] Speaker 00: That being said, happy to answer any questions. [00:30:14] Speaker 01: Can you ask, and this is unbelievably record specific, so if you look at either A27 or it's kind of, the document is printed twice in this, A27, the sentence that says the PRCY identity is subject to review [00:30:28] Speaker 01: In the underlying proceeding, because of the companies on which the review was initiated, 21 companies failed to demonstrate a lack of de jure and de facto control and therefore did not receive a separate rate. [00:30:43] Speaker 01: And it cites the preliminary results at 76137 to 138. [00:30:54] Speaker 01: And I guess I'm having a little trouble understanding [00:30:58] Speaker 01: where on those pages in the preliminary results it indicates that there are 21 companies that failed to make the demonstration of independence from the Chinese government. [00:31:14] Speaker 00: Without having the pages directly in front of me, Your Honor. [00:31:18] Speaker 01: Is it wrong that there were companies other than ATM that were added to the PRC entity? [00:31:27] Speaker 01: in the first administrative review? [00:31:30] Speaker 01: Or is ATM the only one? [00:31:33] Speaker 01: I read that sentence, I think I was told by the government incorrectly read the sentence, to say that there were 21 added in the first administrative review, not in the original investigation, because that's why they were listed separately in the initiation of the review. [00:31:52] Speaker 00: To the best of my recollection, Your Honor, there were 21 [00:31:57] Speaker 00: companies that had at a minimum, because obviously there are other companies in China that weren't identified, 21, and this is again to the best of my recollection, from the original investigation who had originally failed to rebut the presumption. [00:32:14] Speaker 00: And then as a result of litigation, Gang Yang was added into that. [00:32:19] Speaker 00: In the first administrative review, I believe we now have 22, including Gang Yang, [00:32:24] Speaker 00: And by the second administrative review, I believe the number grows to 27. [00:32:30] Speaker 04: Thank you, Mr. Picard. [00:32:32] Speaker 04: Mr. Neely has three minutes of rebuttal time if he needs it. [00:32:36] Speaker 02: Thank you, Your Honor. [00:32:38] Speaker 02: Just a couple of points. [00:32:40] Speaker 02: First of all, just to make it very clear, we don't really care what happens to these 21 companies. [00:32:46] Speaker 02: They're not related to us. [00:32:47] Speaker 02: So in some sense, we don't care. [00:32:49] Speaker 02: But I think what's very important to distinguish [00:32:52] Speaker 02: between the use of adverse inferences against those 21 companies for whatever failures they had, and an adverse inference against our client as part of the PRC-wide entity for anything that it failed to do. [00:33:07] Speaker 02: And they're quite distinct. [00:33:08] Speaker 02: I mean, you can punish the 21 companies, and we have no problem with that whatsoever. [00:33:13] Speaker 02: But we're being punished now for something that had nothing to do with us. [00:33:16] Speaker 05: But the government would argue that this has nothing to do with adverse inferences. [00:33:21] Speaker 05: This has to do with [00:33:22] Speaker 05: conclusion that you were part of a PRC-wide entity that had previously had an established rate? [00:33:29] Speaker 02: They do argue that. [00:33:31] Speaker 02: The rate that they applied was 164.09%. [00:33:34] Speaker 02: That is precisely the rate to the 100th of a percent to the rate that they said was an adverse rate [00:33:46] Speaker 02: in the original investigation that they pulled over to this first review. [00:33:49] Speaker 05: So I don't understand. [00:33:50] Speaker 05: They took account of your cooperation through the averaging, correct? [00:33:54] Speaker 02: I'm sorry? [00:33:54] Speaker 05: They took account of your cooperation through the averaging. [00:33:57] Speaker 05: In other words, they said you have to be a PRC wide entity because you are under government control. [00:34:04] Speaker 05: Well, having said that, they recognized that there was cooperation. [00:34:09] Speaker 05: So they did an average. [00:34:12] Speaker 02: But they've used an ad, if we were cooperative, which is what they explicitly found in this case, there's no basis whatsoever to use any part of an adverse rate. [00:34:22] Speaker 02: I mean, that's pretty clear from the case law. [00:34:24] Speaker 02: You can take a look at our brief, I think, and some detail on that. [00:34:27] Speaker 02: But there's no basis whatsoever if we were cooperative, if the PRC-wide entity was cooperative, meaning we were cooperative to do that. [00:34:36] Speaker 02: Commerce explicitly found that the PRC-wide entity [00:34:42] Speaker 02: had not failed to cooperate. [00:34:43] Speaker 02: So there's no basis for that. [00:34:46] Speaker 02: For them to deny the 164.01% is adverse strikes me as rather strange. [00:34:53] Speaker 02: I mean, when they said it themselves, number one. [00:34:56] Speaker 02: Number two, even by averaging the two together with the 0.15 and the 164, I can tell you without any question that my client cannot export from China, that my client is bankrupt. [00:35:11] Speaker 02: So I can't really fathom why that is not an adverse rate. [00:35:17] Speaker 02: Again, I would direct the court, please, to take a look at what Congress specifically said about our lack of failure to cooperate as a PRC-wide entity and try to square that with the use of adverse rates in part or in whole. [00:35:35] Speaker 02: As to the question of what does the [00:35:41] Speaker 02: Commerce Department do when we say we're the only company, which I think is really next. [00:35:46] Speaker 04: Stanley, I don't think you have further time. [00:35:49] Speaker 02: I'm sorry. [00:35:50] Speaker 02: OK. [00:35:50] Speaker 02: Thank you, Your Honor, for your time. [00:35:52] Speaker 04: We will take this case under advisement, and we will move on to the next one.