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U.S. Court of International Trade Again Finds Flaws in Agency Decision on Diamond Sawblades

December 11, 2012

In a victory for U.S. producers of diamond sawblades, the U.S. Court of International Trade (CIT) has issued an opinion finding flaws in the U.S. Commerce Department’s treatment of a company with ties to the Chinese government. The court announced December 10 that it was remanding the agency’s decision that Beijing Gang Yan Diamond Products Company (BGY) and certain of its affiliates were not controlled by the Chinese government. The agency will now be required to reconsider its decision.

Diamond sawblades (and parts thereof) from the People’s Republic of China have been subject to antidumping duties since November 2009. In its original investigation into Chinese dumping, the Commerce Department found that BGY and its affiliates were free from government control. On appeal, the Diamond Sawblades Manufacturers Coalition, a group of small, primarily family-owned U.S. producers of sawblades, pointed out significant connections and ties between BGY and the Chinese government, as well as recent Chinese laws that appear to strengthen the government’s control over entities such as BGY.

“We welcome the court’s decision, which we hope will lead the Commerce Department to take a hard look at its current practices with respect to companies that are connected to the Chinese government,” said Daniel B. Pickard, a partner in Wiley Rein’s International Trade Practice and counsel to the domestic industry. “As it stands, the agency’s approach to this issue is not reflective of the reality of the state-owned and state-controlled economy in China.” 

This is the second time that the court has found fault with the agency’s reasoning.  In an opinion issued last year, the court questioned the Commerce Department’s decision and requested further explanation. The agency provided the court with additional explanation of its decision, but the court has now found that this additional explanation is also flawed. In addition to requesting further consideration of the decision that BGY is not controlled by the Chinese government, the court requested further explanation and consideration of the agency’s valuation of certain inputs into BGY’s production.

Under the U.S. antidumping laws, the duties applicable to companies controlled by the governments of non-market economy countries, such as China, are generally significantly higher than the duties applied to companies that are not government-controlled. The court’s recent decision could have substantial consequences for any individual that imported Chinese diamond sawblades from 2009 to the present.

“U.S. manufacturers can compete with any other company in the world, but they should not have to compete with the government of China,” Mr. Pickard said. “My clients are hopeful that the Commerce Department will recognize the significant issues arising from BGY’s government ties and make a determination that provides U.S. manufacturers of diamond sawblades with the full relief from dumped imports that they deserve.”