On August 29, 2013, the U.S. Court of International Trade upheld a 2012 Commerce Department finding that small-diameter graphite electrodes (“SDGEs”) made from Chinese unfinished SDGEs in the United Kingdom by U.K. Carbon & Graphite Ltd. (“UKCG”) are circumventing the antidumping duty order against SDGEs from China. Kelley Drye & Warren represented domestic producers SGL Carbon LLC and Superior Graphite Company in the appeal and underlying circumvention proceeding and helped secure the antidumping duties against UKCG’s shipments of SDGEs.
On appeal, the Court rejected UKCG’s argument that the Chinese-origin component fell outside the scope of the order, stating that the artificial graphite rods used in the production of SDGEs in the United Kingdom were one and the same with unfinished SDGEs that are expressly covered by the order. Notably, the Court also held that UKCG’s finishing operation in the U.K. was “minor or insignificant” in that only five minutes of the total production process for a completed SDGE took place in the United Kingdom. As a result of the Court’s finding, SDGEs produced and shipped by UKCG from Chinese rods must now be declared as Chinese origin and will be subject to a China-wide cash deposit rate of 159.64 percent.
The Court’s decision was welcome news for the domestic SDGE producers, which have seen a significant increase in imports of Chinese SDGEs through various circumvention schemes. Just earlier this month, the Commerce Department found that certain Chinese producers were circumventing the order by exporting SDGEs with a slightly larger diameter than that covered within the scope of the order (17 inches versus 16 inches). In that case, the Commerce Department concluded that SDGEs with an actual or nominal diameter of 17 inches are indistinguishable from those of 16-inch SDGEs covered by the order in any meaningful sense in terms of the expectations of ultimate users and the uses of merchandise.
These findings by the Court and the Commerce Department demonstrate the types of circumvention schemes foreign producers often undertake to avoid the payment of lawful duties owed on unfairly priced, injurious merchandise imported into the United States, and also serve as a reminder to U.S. domestic industries that there is a remedy available in such cases under the U.S. trade laws.
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