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U.S. Diamond Sawblade Producers Obtain Significant Victory over Government Controlled Chinese Producers

May 7, 2013

In a victory for U.S. producers of diamond sawblades, the U.S. Department of Commerce (“Commerce”) yesterday issued a decision reversing its earlier finding that a group of Chinese companies had demonstrated independence from the Chinese government in the antidumping duty investigation into diamond sawblades and parts thereof from the People’s Republic of China.

Prior to yesterday’s decision, the agency had calculated a “separate” dumping margin of 2.82 percent for the companies, which include Advanced Technologies & Materials Co. Ltd. (AT&M), Beijing Gang Yan Diamond Products Company and others (“Gang Yan”). As a result of yesterday’s decision, these companies are no longer entitled to 2.82 percent rate, and have instead been assigned the 164.09 percent rate applicable to entities associated with the Chinese government.

“The U.S. industry is gratified by Commerce’s decision to recognize and account for government control over Chinese producers,” said Daniel B. Pickard, a partner in Wiley Rein’s International Trade Practice and counsel to the domestic industry. “Yesterday’s decision is an important step toward providing U.S. sawblade producers with full relief from unfairly priced imports.” 

Yesterday’s decision resulted from an appeal brought by the Diamond Sawblades Manufacturers’ Coalition (DSMC), a group of U.S. producers of sawblades.  After Commerce originally calculated a separate antidumping  margin for Gang Yan, the DSMC filed suit at the U.S. Court of International Trade (CIT),  pointing out significant connections between the companies and the Chinese government, as well as recent Chinese laws that appear to strengthen the government’s control over entities such as Gang Yan. In 2011, the court sent the decision back to the agency for further explanation.  Commerce continued to maintain that the record supported its decision to calculate a separate antidumping duty margin for the AT&M companies.

On December 10, 2012, the court again sent the decision back to the agency. In its opinion, the court found that Commerce continued not to address record evidence regarding government shareholding in Gang Yan, or to explain how Chinese law would insulate the companies from shareholder control. Accordingly, the court again ordered the agency to reconsider its decision. In response, Commerce has now reversed itself. The CIT will review the agency’s new determination, as well as comments from the parties.

The recent decision could result in retroactive and substantial increases in duty liability for any company that imported Gang Yan’s merchandise from 2009—the time that the antidumping duty order was issued—to the present. The decision may also lead to significant cash deposits for future imports as a result of related litigation.