Federal Circuit Court of Appeals Issues China CVD Opinion
April 30, 2014

This article was authored by International Trade Specialist Michael J. Kelleher

Background

In 2009, Commerce determined that Guangdong Wireking Housewares & Hardware Co. (“Wireking”) was receiving a government subsidy to produce and export its kitchen appliance shelving and racks (“KASR”) in China, and imposed a net subsidy rate of 13.3 percent.  See Kitchen Shelving and Racks from the People’s Republic of China, 74 Fed. Reg. 37,012 (July 27, 2009).  Wireking then appealed several aspects of Commerce’s affirmative CVD determination to the CIT, including its imposition of a “double-remedy” (the simultaneous imposition of CVD and antidumping (“AD”) duties). 

In March 2010, the Wireking appeal was stayed while the Federal Circuit decided a similar case in GPX Int’l Tire Corp v. United States.  In a favorable ruling for Wireking, the CAFC eventually ruled in GPX that CVD duties couldn’t be imposed on NMEs like China.  See GPX Int’l Tire Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011) (“GPX I”), reh’g granted, 678 F.3d 1308 (Fed. Cir. 2012) (“GPX II”).  However, Congress reacted to the Federal Circuit’s holding in GPX, by enacting new legislation which explicitly authorized Commerce to impose both AD and CVD duties on imports of NMEs, retroactive to 2006.  See Application of Countervailing Duty Provisions to Nonmarket Economy Countries, § 2(a), Pub. L. No. 112-99, Mar. 13, 2012, 126 Stat. 265 (Mar. 13, 2012) (codified as amended at 19 U.S.C. § 1677f-1(f)(1)(C) ) (“Pub. Law 112-99”).

Following Congress’ enactment, Judge Tsoucalas of the CIT denied Wireking’s motion for judgment on the agency record on March 12, 2013, finding that Public Law 112-99 was constitutional and Commerce’s determination was supported by substantial evidence and otherwise in accord with the law.  Judge Tsoucalas declined to decide whether the new law had a retroactive effect. 

CAFC Appeal

In May 2013, Wireking appealed Tsoucalas’ decision to the CAFC.  Wireking challenged Public Law 112-99 because it violated the Ex Post Facto Clause of Article I, Section 9 of the Constitution (the Constitution prohibits the retroactive application of penal legislation because the CVD law cannot be applied).  On March 18, 2014, the CAFC issued its opinion in the Wireking appeal, upholding Congress’ legislation to allow Commerce to assess CVD duties on imports from countries with non-market economies, including the KASR Order.  First, it held the 2012 amendment operated retroactively.  See Guangdong Wireking Housewares & Hardware Co v. United States, Slip Op. at 11-14.  It then examined whether the amendment’s provisions were “penal legislation that violate{d} the Ex Post Facto Clause.”  Id. at 15.  The Court concluded:  “Wireking has not shown, let alone by the clearest proof, that the absence of a retrospective double-counting provision negates the law’s predominantly remedial impact. . . . {W}e find that the 2012 law is not punitive and does not violate the Ex Post Facto Clause.”  Guangdong Wireking Housewares & Hardware Co v. United States, Slip Op. at 25.

Kelley Drye & Warren (Paul Rosenthal; Kathleen Cannon; David Smith) represented domestic producers Nashville Wire Products, Inc. and SSW Holdings Co., Inc. in the underlying countervailing proceeding before Commerce; assisted in the drafting of the legislation that authorized Commerce to impose CVDs on imports from China; as well as participated in the successful appeals before the CIT and CAFC.