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2015-06, Abbas Sinai against the United States.

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Mr. Simon.

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Good morning.

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May it please the court?

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I'm David Simon, representing the affluent Habash Sinai.

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In 2017, the Commerce Department applied a CBD rate of 14.01% to Habash as adverse facts available for Habash's failure to report benefits

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under Turkey's duty drawback program.

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The source of that AFA rate was an export tax rebate that Commerce had investigated back in 1986.

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Here we argue that Commerce failed to establish its, to follow its established hierarchy in selecting this rate as AFA and it failed to corroborate its selection as required by the statute.

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As regards rate selection, the statute lists the sources from which Commerce may select an AFA rate.

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To make its selection, Commerce uses a long-standing hierarchical approach that we summarized on page two of our reply brief.

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Mr. Simon, this is Judge.

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Yes.

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I have a general background question for you.

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I was wondering if you could tell me, please, what is a duty drawback and what is the duty drawback plan, just kind of generally, what is it that was an issue in this case?

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I understand that it might not be, I might not need to know it to resolve the issues in this case, but I don't know what one is, so I'd like somebody to tell me.

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Okay.

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Habas manufactures rebar.

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To make its rebar,

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it imports, among other things, steel billets into Turkey.

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And it pays an import duty on those billets, either in actual cash at the time of that importation or on some kind of account system with Turkish customs.

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When it exports its finished goods, that is the rebar, it receives from the Turkish government

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a rebate of the duties it paid on the input.

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So, in effect, the exportation wipes clean the liability for the import tariffs, the import duties, or rebates them if they've been paid in cash.

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Okay, thank you.

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So regarding rate selection, Commerce used its longstanding hierarchical approach.

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In our brief to the agency, Habas proposed that Commerce use as AFA an identical program from another case, namely a duty drawback under Turkey's so-called KKDF law, which was another tax on imported inputs.

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Commerce has repeatedly held that the KKDF drawback is identical to a duty drawback.

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Has an identical... Council, this is Judge Rada.

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You're not disputing that Commerce had bases on which to apply an AFA rate.

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No.

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It seems to me that your argument, your

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Your position is that they just simply chose the wrong basis on which to establish what the rate would be.

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That's right.

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They didn't follow their hierarchy and they didn't... Well, they established the rate on the third aspect of that hierarchy.

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There's no rate available.

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The highest non-denominational rate for a similar program based on the treatment of the benefit, which we're talking about the same benefit here,

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in another CVD proceeding, both CVD proceedings involving the same country.

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So I don't think there's any dispute either is or that the duty drawback program that we're talking about is from the same country.

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There's no dispute that this particular element of the program applies.

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Oh, there is, Your Honor, respectfully.

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I thought maybe you were arguing that it applies.

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It just shows the wrong country and the wrong rate.

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I'm not sure what it means when you say it applies.

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This is an AFA case.

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We don't dispute that AFA is appropriate.

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We say that commerce did not

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run through its hierarchy properly because there is a step two rate, namely the KKDF rate.

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It's a duty drawback program and it's Turkish and therefore it should have been applied.

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You don't even get to step three in which Commerce looks for a similar program based on the treatment of the benefit.

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Okay, that's what I was trying to clarify.

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I'm trying to get you to get to the heart of your argument.

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Well, the argument has two hearts.

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One is whether the rate was properly corroborated, and I will get to that.

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But the first argument, which really came up as a result of the government's argument, the first argument is whether the department properly applied its hierarchy.

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It's an established practice, and so they're required to follow.

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Mr. Simon, this is Judge Soule.

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I'm sorry to interrupt you, but I noticed that you didn't have your KKDF argument in your blue brief.

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Could you tell me why you didn't forfeit your KKDF argument when you didn't present this issue in your opening brief or before the CIT?

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The CIT several times says that you never provided an alternative and you didn't seem to provide this until your reply.

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We have provided the alternative in our brief to the agency.

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But you didn't provide it to the CIT and you didn't provide it to us in your open brief, right?

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That's correct.

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And you, of course, are looking at the case de novo and the issue arises because

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The government in its reply brief says that we never provided an alternative for commerce to use.

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And that's simply a misstatement of fact, and I had to run through that in order to rebut the misstatement of fact.

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I don't think I've waived anything.

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I argued it at commerce.

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You are looking at the case de novo.

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and it was raised by the government and it was an incorrect statement.

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But did you raise it at the CIT?

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No.

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No.

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But again, we're looking at it de novo and the CIT made a finding not supported by the record.

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This was a marginal issue with the CIT, but yes, you're right, we did not raise it there.

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If it's the main argument you're making here, an appeal at oral argument, you didn't even include it in your blue brief either, right?

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That's correct.

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I mean, I could switch the order of the argument and talk corroboration first, but since in the statute, the rate selection precedes corroboration, I'm going according to the statutory order.

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So the corroboration issue, that's something that was addressed in a similar case.

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And Azdemir, is that the same issue?

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Yes.

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OK.

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Yes.

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I have another question for you.

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Now, this is just, again, another background issue.

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But because Tavis was the only mandatory respondent, is that why there was no identical program match under 1677-ED1A-I?

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If there had been another mandatory respondent, I don't know whether they would have reported drawback or not.

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So I really can't say.

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But Habas was the only company, and the reason it was the only company is because they had gotten a zero in 2013 in a previous case.

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And so the petitioner started a new case in 2013.

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15 or 16 when this case was initiated.

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So all the rest of the Turkish industry was under a CVD order, but Habas was out because it had been found not to be receiving substance.

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If I can come back to the rate collection just for a minute.

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Was the rate that ultimately was applied, was it corroborated?

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No.

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It was not... I thought that the rate that they applied as an AFA rate was a corroborated rate in the prior proceeding, CWE proceeding.

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Well, it was investigated and found to exist back in 1986.

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In 1987, it was found to have been terminated.

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But the fact that it's 30, 35 years old...

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Even under the SAA, the remoteness in time vitiates its corroboration.

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And that's really the argument you've made to us in your briefs here, right?

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That the rate that they applied is stale.

[00:10:32] Speaker 06:
No, not just that it's stale, but that the behavior underlying that rate can no longer exist.

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because the government of Turkey agreed to terminate that program when it signed onto the gas subsidies agreement.

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So the program was terminated.

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Commerce found the program was terminated.

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And the government continues to argue that Turkey's behavior in 1986 could somehow be relevant today.

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And I say it couldn't be because they agreed

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to terminate that behavior, and Commerce acknowledged that in 1987.

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OK.

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Let's hear from the other side, and we can pursue this aspect within as well.

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Thank you, Mr. Simon.

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Ms.

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Jensen.

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Good morning, Your Honors, and may it please the Court.

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There's only one issue on appeal here today for this court to consider, and that is whether commerce corroborated to the extent practicable and using information reasonably available to it.

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The 14.01% adverse rate that it applied to Habash for failing to disclose a duty drawback program that Habash benefited from during the period of investigation.

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But you're saying there's no issue?

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that when that program was terminated in 1987 that it's sale?

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No, that is not an issue that affects the accuracy of the rate or whether or not commerce can select that rate to apply as adverse facts available.

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Well, let's assume that it is an issue so that we can be sure that we've adequately explored it.

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Well, the reason the length of time that has passed since commerce had calculated that rate is not controlling here is because commerce, when it applies or selects among ASA rates, it is confronted with limited information on the record by way of a respondent's failure to cooperate and its failure to put its own information on the record under which commerce would normally be able to do its calculation.

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Here, because Habas was the only mandatory respondent and it failed to disclose the duty drawback program, Commerce was forced to look elsewhere to select a rate to apply to it.

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And so Commerce found itself looking at Tier 3 of this hierarchy and up until Habas's reply brief, I believe there was no dispute that Commerce correctly looked at Tier 3 of the hierarchy and had to look to another

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similar program under which a countervailing duty had been calculated in a prior proceeding in Turkey.

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And in doing so, Commerce selected the highest non-dominant rates from that proceeding and applied it here.

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The corroboration requirement was met to the extent that Commerce could do that because it determined that rate, the 14% rate, to be both

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relevant and reliable.

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And Commerce explained this in its issues and decision memo at Appendix Pages 133 to 134.

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Is there any legal authority that requires that the rate or that the program that produces a rate still be enforced?

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Not that I'm aware of, Your Honor.

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And Habash has really imported a new requirement that is not required by statute, and that's under 1677.

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or that commerce has ever engaged in for its practice of applying this hierarchical, the hierarchical method in selecting an adverse tax available rate.

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If one were to read the statute as narrowly as the bond asks this court to do and to restrict commerce in what rates it can choose,

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Commerce would really not be able to do, to effectuate the purposes of the adverse facts available analysis with any kind of success.

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And the reason there is because as commerce has to move down through the hierarchy, it's confronted with less and less information on the record before it.

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There was very little information on this record for one, for two reasons.

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One, we only had one mandatory respondent, and that was Habash, and two, Habash

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declined to cooperate in the proceedings.

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And so there were no other respondents to look at.

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So commerce was required to look elsewhere.

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And if commerce could not use a rate that had been calculated under a program that subsequently terminated, it's unclear where else commerce could look to for a rate select.

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And with respect to the charge that the rate is stale or it's no longer good, that is just not

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that was flatly incorrect.

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The program was terminated.

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The rate remains correct in that it reflects how a government of Turkey calculated and applied taxes under a specific program to other producers in Turkey of a similar product in 1986.

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And that rate has never been challenged by the court or by any party.

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And so it remains a good rate.

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Council, do you know whether that rate was verified in that prior proceeding?

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Yes, it was the final calculated subsidy rate that was applied to the respondent.

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And it was never challenged in litigation.

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Did Commerce actually conduct verification in that case?

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I mean, beyond calculating the final rates, I don't have any more information than that.

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But it became part of the final, it was the final determination on the administrative review of that.

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Ms.

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Janssen, this is Judge Stoll.

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What is your position on the live controversy issue raised by Rebar in its red brief?

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I noticed that the government didn't take that same position.

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We don't dispute that Habash has standing to bring this appeal, but we do believe that contesting the rate itself is best left to the administrative review process and not before this Court to get into the actual rate that's been applied here.

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But the reason we did not address that in the same way that our TAC has is that we understood the issue raised by Havash to be a singular one that is repeated a few times in his opening brief, which is Havash asked the court to adopt a maxim that any rate selected by commerce

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to be applied as adverse facts available can never, as a matter of law, be corroborated if the program that gave rise to that rate has been terminated.

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And as a maximum, we disagree with that.

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And as a matter of law, that cannot be correct.

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And we dispute that reading.

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And so to the extent that is what Pabash is asking this court to do, to create law.

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Well, that's not quite fair.

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They said it was terminated over 30 years ago.

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Not that it was terminated yesterday.

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But the formulation of the issue, and this has been identified a few times in Habash's briefing, is the maximum that any terminated program cannot be used

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by commerce to select an adverse tax available rate.

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Their argument, they emphasize how long ago it was terminated.

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They do, but they also, and I would just invite the court to look at their reply brief at file page 19, where they say simply that a terminative program cannot have probative values since no respondent can ever benefit underage.

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And their opening brief at file page 25, they say the terminated program cannot be relevant and reliable and any reading of the law allowing commerce to apply as at respect available rate from a program that's been terminated is unreasonable.

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So that maximum standing on its own, if that is the issue for this court, then we disagree with that and, you know, respectfully ask this court to uphold

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the Court of International Trade's opinion below.

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I would just like to, if I may, correct a statement by Mr. Simon that this Court, suggesting that this Court can review the now new alternative rate that he puts on the record or he rates for the first time his reply brief because this Court has de novo review

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Of course, the noble review only applies to the issues that were raised and identified by the Court of International Trade and the issues raised here.

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There's nothing that's been put on this record in any of this litigation with respect to the KKDF rates.

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And although it was, it can be found in Mr. Simon's

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rebuttal brief before the agency, that was the end of that argument.

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And it was not considered by CIT and it was not considered here.

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And so we respectfully ask the court to disregard that argument.

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But even if we were to consider that rate just on the merits, there's a couple of problems with it.

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The first is that it does not comport with Habash at the maximum that a terminated program can never serve as the basis for an ASA rate because

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The KKDF program was in fact terminated back in 2015.

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The rate calculated under it was calculated over 20 years ago as well.

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So it doesn't, it's not consistent with Habash's own principle that it's seeking to impose on commerce.

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Additionally, in its reply brief and in support of the KKDF rate, Habash cites to no record evidence, that is no primary information

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that Commerce would use in this administrative review to consider whether or not that program was more similar than the 1986 program for purposes of NAFTA rates.

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Instead, Habash cites to a series of regulations, other cases, administrative review proceedings elsewhere, but no primary or no record evidence is provided.

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HABAS itself cannot corroborate any of the information that it is proposing Commerce now use for the first time here.

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And finally, if there are no additional questions by the court, I would just like to highlight the requirement that the corroboration that Commerce did do here with respect to the relevancy of the rate that it applied.

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because I believe Habashi stated the standards well in its briefing.

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The relevancy corroboration requirement at tier three in the analysis requires commerce to look to a similar program.

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And similarity is obviously a fact based inquiry, but it looks at similarity between the benefit that is provided by a foreign government to a producer

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in a specific program and considers whether or not those benefits are similar for purposes of the program.

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Habash suggests that the similarity requirement somehow informs how the rates are calculated, what is in the numerator and what is in the denominator.

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That is not the analysis.

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And Commerce explained this thoroughly in its Issues and Decision Memo at Appendix Page 133.

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If I could just finish my answer I will happily end after that.

[00:23:43] Speaker 04:
Okay.

[00:23:44] Speaker 04:
Now finish your sentence.

[00:23:46] Speaker 03:
Thank you.

[00:23:47] Speaker 03:
So Commerce concluded that there was similarity here between the two programs in terms of the type of benefit and by that Commerce means

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a grant, a loan, an indirect tax, an export rebate tax, for example, and doesn't get into the more technical aspects of how those are calculated by the government.

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Here, the calculated rate was based on information provided for another export tax rebate program, and so it was found to be similar because it reflected the behavior of the government of Turkey with respect to a program that was also

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providing an export tax rebate.

[00:24:29] Speaker 03:
Okay, thank you.

[00:24:31] Speaker 04:
Thank you, Ms.

[00:24:32] Speaker 04:
Jensen.

[00:24:33] Speaker 04:
Mr. Shane, you have three minutes.

[00:24:36] Speaker 01:
Thank you, Your Honor.

[00:24:37] Speaker 01:
May it please the Court, I'm John Shane here on behalf of the Rebar Trade Action Coalition or ARTAC.

[00:24:44] Speaker 01:
ARTAC agrees with the arguments made by DOJ Council and I won't go over those points again here.

[00:24:51] Speaker 01:
I'm going to focus my brief comment today on a separate argument, namely that there's no live case or controversy that would provide the court with Article III jurisdiction.

[00:25:03] Speaker 04:
I think it would be more helpful to me if you were to help to explain why this 30-year-old rate is applicable.

[00:25:14] Speaker 01:
Sure.

[00:25:15] Speaker 01:
I'd be happy to do that, Your Honor.

[00:25:16] Speaker 01:
So I think that the two factors that

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should be looked at in terms of why that rate is still appropriate.

[00:25:25] Speaker 01:
First, it's a reliable rate.

[00:25:28] Speaker 01:
I mean, it was a rate.

[00:25:30] Speaker 04:
Why is it reliable?

[00:25:32] Speaker 01:
It's 30 years old.

[00:25:35] Speaker 01:
I'm sorry, Your Honor.

[00:25:36] Speaker 01:
I didn't catch that last part.

[00:25:37] Speaker 04:
Did I hear you say it was a reliable rate?

[00:25:40] Speaker 04:
It was reliable in 1986.

[00:25:44] Speaker 01:
Well, I think I would argue, Your Honor, respectfully, that it's

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still reliable because it was a rate calculated by the Commerce Department, a final rate, and therefore should serve as a reliable indicator of an appropriate AFA rate.

[00:26:05] Speaker 04:
I would also say...

[00:26:09] Speaker 04:
You see what's troubling me about all of this.

[00:26:13] Speaker 04:
I didn't see any ways in your briefs or in the governments or in commerce's explanations.

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why the circumstances were identical now to those in 1986.

[00:26:31] Speaker 04:
And therefore, when that rate was terminated the following year by Turkey, why nonetheless today it's applicable.

[00:26:41] Speaker 04:
This is what's troubling me about the case.

[00:26:44] Speaker 04:
So any help you can provide, I'd be interested.

[00:26:48] Speaker 01:
Sure, Your Honor.

[00:26:49] Speaker 01:
I would say even though it was terminated 30 years ago,

[00:26:55] Speaker 01:
I believe it's still a relevant indicator of an appropriate AFA rate.

[00:27:00] Speaker 01:
It was a rate that was calculated in Turkey, same country that's at issue here.

[00:27:08] Speaker 01:
It is relevant also since it relates to a similar tariff drawback program.

[00:27:16] Speaker 01:
And so there's nothing on the record that indicates even though it is 30 years old,

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that that's not an appropriate rate.

[00:27:24] Speaker 01:
I think also just in terms of context here, I think it's important to understand that the agency commerce was put in this position by the recalcitrant, the failure to cooperate by the respondent, Haban.

[00:27:42] Speaker 01:
And so if I may finish my answer, Your Honor?

[00:27:45] Speaker 01:
Please do.

[00:27:45] Speaker 01:
And so I think it's important to understand the context here and the limited

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information on which commerce had to choose to find an appropriate AFA rate under those circumstances.

[00:28:01] Speaker 04:
Thank you.

[00:28:03] Speaker 04:
Okay.

[00:28:03] Speaker 04:
Thank you.

[00:28:06] Speaker 04:
Let's see.

[00:28:07] Speaker 04:
Mr. Simon, you have a few minutes in rebuttal.

[00:28:12] Speaker 06:
Thank you very much.

[00:28:14] Speaker 06:
Mr. Shane just suggested that the 1986 program is a similar tariff drawback program.

[00:28:22] Speaker 06:
And in fact, that mirrors Commerce's language as to the program selection.

[00:28:27] Speaker 06:
They claim that the 1986 program is irrelevant because it is, quote, another tariff rebate program, end quote.

[00:28:36] Speaker 06:
It was not.

[00:28:37] Speaker 06:
The 86 export tax rebate was a rebate of a bunch of taxes upon exportation of goods.

[00:28:48] Speaker 06:
And those taxes included indirect taxes

[00:28:52] Speaker 06:
direct taxes, a supplemental tax that if you had a greater than a given amount of exports, you got a cash benefit for that.

[00:29:05] Speaker 06:
None of these are a tariff rebate.

[00:29:08] Speaker 06:
There is no commonality between the export tax rebate program and a duty drawback.

[00:29:18] Speaker 06:
The only

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The possible commonality is that the words export tax rebate kind of resemble the words duty drawback in writ large.

[00:29:34] Speaker 06:
But in fact, if one actually reads the 86 commerce decision, you will find that those programs, those taxes that are rebated have nothing to do with a tariff rebate.

[00:29:50] Speaker 06:
Tariffs were not part of that.

[00:29:52] Speaker 06:
And I come back also to, I think it was Judge Raina that asked if there was verification in the 1986 case.

[00:30:02] Speaker 06:
And if Commerce had read the actual 1986 decision, they would have seen that, yes, there was verification.

[00:30:12] Speaker 06:
I read it.

[00:30:13] Speaker 06:
We verified the responses of the government, the Borisan Group, et cetera.

[00:30:18] Speaker 06:
between November 4 and November 16, 1985.

[00:30:22] Speaker 06:
So the government is not reading the decisions, it's just picking things based on names, which is conclusory, it's misleading, and it just leads to a wrong result.

[00:30:36] Speaker 06:
There is no similarity whatsoever in terms of the treatment of the benefit or in any other terms between the 1986 export

[00:30:49] Speaker 06:
tax rebate program and a duty drawback.

[00:30:53] Speaker 06:
Commerce looks at duty drawbacks all the time, Turkish duty drawbacks all the time in every Turkish dumping case and it had looked at them in many of the Turkish CVD cases and always found them to be either de minimis or not counter available.

[00:31:12] Speaker 06:
So Commerce can't pretend it doesn't know anything about duty drawback.

[00:31:17] Speaker 06:
It knows it quite well.

[00:31:19] Speaker 06:
And when they say that this duty drawback that wasn't reported by Habas is similar to what they call another tariff rebate program, they are simply misstating the facts.

[00:31:36] Speaker 06:
And they're misled because they believe they don't have to go back and look at these earlier decisions in which they calculated rates that are being used as AFA.

[00:31:49] Speaker 06:
They think they can just pick a number and use a name as substantial evidence.

[00:31:56] Speaker 06:
You have to go back and look at the decisions.

[00:31:59] Speaker 06:
We all know that as lawyers.

[00:32:04] Speaker 06:
That completes what I had to say, so thank you very much.

[00:32:07] Speaker 04:
Okay, thanks to counsel for both sides.

[00:32:12] Speaker 04:
The case is taken under submission and that concludes this panel's argued cases for this morning.