[00:00:03] Speaker 00:
The United States Court of Appeals for the Federal Circuit is now open and in session.

[00:00:07] Speaker 00:
God save the United States and this honorable court.

[00:00:12] Speaker 00:
Whenever you're ready, Judge Newman.

[00:00:14] Speaker 07:
Okay, thank you and good morning, everyone.

[00:00:16] Speaker 07:
We will proceed with the first case.

[00:00:18] Speaker 07:
That's number 191400, Prosperity Tier Enterprise Company against the United States.

[00:00:26] Speaker 07:
Mr. Cameron, please proceed.

[00:00:28] Speaker 03:
Thank you, Your Honor.

[00:00:29] Speaker 03:
Don Cameron on behalf of Prosperity.

[00:00:32] Speaker 03:
This appeal concerns an anti-dumping investigation of corrosion-resistant steel from Taiwan, Coor, where Commerce initially limited its investigation to the two largest producers-exporters, Prosperity and Yei Tui, which we refer to as YP.

[00:00:55] Speaker 03:
Prosperity and YP are the only major producers of Coor in Taiwan and are fierce competitors.

[00:01:00] Speaker 03:
The other producer involved in the investigation was SIN, a very small producer that did not even export core to the United States during the investigation period.

[00:01:11] Speaker 03:
In the preliminary determination, Commerce found that prosperity was not dumping based upon an evaluation of its own individual sales and cost data.

[00:01:21] Speaker 03:
And that should be excluded from the anti-dumping order.

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This individual examination is consistent with 19 USC 1677.

[00:01:31] Speaker 03:
1C, which states that Commerce should normally calculate separate dumping margins for each investigative producer based upon their own pricing behavior.

[00:01:42] Speaker 03:
For the mandatory respondent, YP, Commerce calculated a combined dumping margin with SIN based upon Commerce's conclusion that YP and SIN should be collapsed.

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In the final determination, Commerce decided instead to collapse

[00:01:59] Speaker 03:
prosperity with the YP SIN entity.

[00:02:03] Speaker 03:
However, in doing so, Commerce focused solely on the relationship between prosperity and SIN, not the relationship between prosperity and YP or the relationship between prosperity and the YP SIN collapsed entity, of which SIN is only a small part.

[00:02:25] Speaker 02:
What difference would it make if

[00:02:27] Speaker 02:
they had focused on the collapsed entity as you argue they should have.

[00:02:33] Speaker 02:
It's a practical matter.

[00:02:35] Speaker 02:
How would that have changed the analysis?

[00:02:39] Speaker 02:
I mean, we're concerned here about manipulation.

[00:02:41] Speaker 02:
How would treating the question as being a combined entity bear on the question of manipulation?

[00:02:51] Speaker 03:
Well, as we described in our brief, Your Honor, when you analyze prosperity in relationship to the combined entity, the quote unquote intertwined relationships are minuscule.

[00:03:04] Speaker 03:
Prosperity owns their ownership is approximately 1% of the combined entity.

[00:03:17] Speaker 03:
interaction with SIN was minor in itself, but when it's with the combined entity of YP SIN, it's in the, you know, hundreds of decimal points.

[00:03:28] Speaker 07:
So... Is this a 20% ownership relationship without the combined entity?

[00:03:36] Speaker 03:
The 20% is only with SIN, which is a small entity.

[00:03:40] Speaker 03:
With the combined entity, prosperity's ownership interest in the combined entity would be less than a percent, or approximately 1%.

[00:03:48] Speaker 03:
Because SIN is such a small part.

[00:03:52] Speaker 03:
They're such a small company.

[00:03:53] Speaker 03:
This was the linkage between these two huge companies.

[00:03:56] Speaker 03:
And this is the only analysis that Commerce did.

[00:04:00] Speaker 03:
And that actually is the main point.

[00:04:03] Speaker 03:
bootstrapped their analysis of SIN, which was a minor player in the market, and then collapsed the two major players into a combined entity.

[00:04:14] Speaker 03:
And, of course, they found that this created a, quote, significant potential for manipulation of prices and production.

[00:04:23] Speaker 03:
Well, another thing that the Commerce Department found and investigated at verification was that prosperity had divested itself even of the 20% investment that they had in SIN that you're referring to.

[00:04:37] Speaker 03:
Now, this was after the POI, but it was before any anti-dumping duty deposits, and it was verified at the verification.

[00:04:49] Speaker 03:
So by collapsing, yeah.

[00:04:51] Speaker 02:
I'm still not entirely following this.

[00:04:54] Speaker 02:
The result of collapsing SIN with the other entity is not that they become a single entity.

[00:05:02] Speaker 02:
It's just that they're treated that way for purposes of anti-dumping.

[00:05:07] Speaker 02:
Why does the fact that the collapsing occurred with respect to those two entities make it more likely that prosperity

[00:05:19] Speaker 02:
would or would not be able to manipulate the flow of goods so as to avoid anti-dumping duties?

[00:05:29] Speaker 03:
Well, first of all, your honor's point goes to the fact that it does look into the future.

[00:05:35] Speaker 03:
But secondly, what Commerce did was they took prosperity and said, we are going to make this a collapsed entity altogether.

[00:05:47] Speaker 03:
This raises the question, how was prosperity going to manipulate prices and production of SIN, number one, once it had divested itself?

[00:05:57] Speaker 03:
And number two, when the actual management of SIN was controlled by YP, their major competitor.

[00:06:09] Speaker 04:
So your argument, this is Judge Raina, your argument is that commerce is obligated to analyze prosperity

[00:06:16] Speaker 04:
single entity, Yi and Sin?

[00:06:20] Speaker 04:
Correct, Your Honor.

[00:06:22] Speaker 04:
Okay.

[00:06:22] Speaker 04:
And what is it that you think commerce should have done today?

[00:06:27] Speaker 04:
Have gone back to the regulation and to 351-401-F and conduct that analysis anew?

[00:06:36] Speaker 03:
Well, Your Honor, I think that they should have.

[00:06:38] Speaker 03:
That regulation speaks of both these producers, which is all producers, number one,

[00:06:46] Speaker 03:
Excuse me.

[00:06:48] Speaker 04:
Okay.

[00:06:48] Speaker 04:
Well, I asked that because it seems to me that under the first statute, then the regulation, there's nothing that prevents commerce from making these type of multiple collapsing, you know, as long as it goes through the analysis each time it does this.

[00:07:07] Speaker 04:
And so I'm trying to understand what is it that you think went wrong here?

[00:07:12] Speaker 04:
Assuming I'm correct, if they can't put this, what went wrong?

[00:07:17] Speaker 03:
We believe that by doing only, by looking only at SIN, they lack any context.

[00:07:23] Speaker 03:
And therefore, the analysis itself was improper.

[00:07:26] Speaker 03:
And since the entire analysis is focused on looking at whether or not there is a significant potential for price or production manipulation, it's very difficult to get there if you're only looking at a small slice.

[00:07:40] Speaker 03:
I see that I'm already into my rebuttal, but.

[00:07:43] Speaker 07:
Now, please continue.

[00:07:44] Speaker 07:
This is the point.

[00:07:45] Speaker 07:
that I think is troubling all of us to try and understand what difference it makes.

[00:07:52] Speaker 07:
And also in terms of duties for past importations, how any change in the ownership structure might affect that.

[00:08:03] Speaker 07:
So please continue to answer Jotrina's question.

[00:08:06] Speaker 03:
Thank you, Your Honor.

[00:08:08] Speaker 03:
Well, number one, it didn't have any impact whatsoever on the past.

[00:08:12] Speaker 03:
It would only affect the future.

[00:08:14] Speaker 03:
And of course, the regulation speaks of the future.

[00:08:17] Speaker 03:
And with the divestment, there was going to be no future because no anti-dumping duty deposits had been collected.

[00:08:26] Speaker 04:
OK, so this is, I guess, so when the collapsing occurs, are we seeing that the result of the collapse is a new creature?

[00:08:38] Speaker 04:
Obviously, it's a single entity now.

[00:08:42] Speaker 04:
Two entities are collapsed, single entity.

[00:08:45] Speaker 04:
But is that single entity, the resulting single entity, is that a new creature that must itself be subject to the regulatory analysis?

[00:08:58] Speaker 03:
Absolutely, Your Honor.

[00:08:59] Speaker 03:
And once they collapse,

[00:09:02] Speaker 03:
That whole entity is looked at.

[00:09:04] Speaker 03:
That's what created the dumping margin in the first place.

[00:09:07] Speaker 03:
In other words, instead of just looking at prosperity's home market and export prices, it's prosperity's home market prices combined with Ye Hui's home market prices and Sin's home market prices.

[00:09:22] Speaker 03:
And then we will compare all of Ye Hui and all of prosperity's export prices to that combined entity.

[00:09:30] Speaker 03:
So you are creating an entire new entity.

[00:09:37] Speaker 02:
But why is the fact that there was, in your view, a new entity created means that the commerce can appropriately also focus on the relationship between prosperity and the original sin?

[00:09:57] Speaker 02:
The SIN, the original SIN.

[00:09:59] Speaker 02:
Why does that become irrelevant to focus on that separately on the so-called combined entity?

[00:10:07] Speaker 03:
My apologies, Your Honor.

[00:10:08] Speaker 03:
I'm not suggesting that they're not allowed to analyze SIN.

[00:10:13] Speaker 03:
But the question is the Commerce Department, it says that we're going to take into account the totality of circumstances.

[00:10:19] Speaker 03:
And how can you analyze the totality if you're going to take a small slice of the enterprise

[00:10:26] Speaker 03:
For instance, look at the ownership.

[00:10:29] Speaker 03:
In the case of the ownership, prosperity owned 20% of SIN.

[00:10:34] Speaker 03:
And yet, when you look at the combined Yeh Fui SIN entity, it was 1%.

[00:10:41] Speaker 03:
That gives you an idea of exactly what these potential for manipulation was.

[00:10:47] Speaker 03:
And since the entire regulatory structure speaks of significance and the significance of any potential, that's what shows, demonstrates that the potential was not significant.

[00:11:02] Speaker 03:
So that is our position.

[00:11:06] Speaker 07:
All right.

[00:11:06] Speaker 07:
Let's continue and we'll save you rebuttal time.

[00:11:10] Speaker 07:
Let's see.

[00:11:12] Speaker 07:
Ms.

[00:11:12] Speaker 07:
Slater, are you proceeding with... Ms.

[00:11:17] Speaker 07:
Slater, are you ready?

[00:11:17] Speaker 01:
Yes.

[00:11:19] Speaker 01:
I'm just unmuting myself and going to non-speaker phones so that people can hopefully hear a little bit better.

[00:11:28] Speaker 07:
Okay.

[00:11:30] Speaker 07:
I hear you clearly.

[00:11:31] Speaker 01:
Wonderful.

[00:11:32] Speaker 01:
Thank you.

[00:11:32] Speaker 01:
Good morning.

[00:11:33] Speaker 01:
My name is Kelly Slater.

[00:11:35] Speaker 01:
I'm with Appleton-Luff Law Firm and I represent plaintiff's appellant, Yehweh Enterprise Company.

[00:11:40] Speaker 01:
I'd like to thank the court for this opportunity to discuss this case under these truly extraordinary circumstances.

[00:11:49] Speaker 01:
I'd like to start with a discussion about the difference between the definition of affiliation on the one hand and the test for collapsing on the other in the dumping statute and the Department of Commerce's regulations.

[00:12:04] Speaker 01:
Affiliation is merely one factor in commerce with collapsing costs.

[00:12:09] Speaker 01:
That is to say, affiliation has a much narrower focus on static linkages among companies.

[00:12:19] Speaker 01:
Those arise from relationships that include family relationships, which are static, shared officers or employees, shared stockholders, or shared control over an entity.

[00:12:30] Speaker 01:
Now, control is a term that is loosely defined.

[00:12:33] Speaker 01:
and apply it on a case-by-case basis.

[00:12:36] Speaker 01:
Now the collapsing regulations reach much further.

[00:12:40] Speaker 01:
Beyond affiliation, they require a finding that operations between companies are actively intertwined, actively intertwined, such that it would give rise to a significant potential of price or production manipulation, such as through the sharing of sales information, mutual involvement,

[00:13:03] Speaker 01:
in production, pricing decisions, the sharing of facilities, or significant transactions between the affiliated parties.

[00:13:15] Speaker 07:
But isn't that really asking too much of the investigation as to what's active and what's inactive when there is, if there is, in fact, a sufficiently significant ownership relationship?

[00:13:33] Speaker 01:
It goes beyond ownership interest.

[00:13:35] Speaker 01:
It's the collapsing standard, if I understand you correctly, Your Honor.

[00:13:41] Speaker 01:
It's about active participation across the businesses.

[00:13:46] Speaker 01:
That is sort of why I couched it in this way, static linkages versus active linkages.

[00:13:53] Speaker 01:
Active participation in the company's respective businesses.

[00:14:02] Speaker 07:
Okay, well how do we know that commerce erred in the inferences that they drew?

[00:14:09] Speaker 07:
In terms of what's active or inactive excepting the premise of a significant ownership interest such as 20%.

[00:14:32] Speaker 01:
Again, I'm trying to draw the distinction between the affiliation standard and the collapsing test.

[00:14:43] Speaker 01:
And those are two different considerations.

[00:14:46] Speaker 01:
Affiliation is maybe sort of a tip-off point to collapsing analysis, but it is not

[00:14:59] Speaker 01:
the final analysis.

[00:15:01] Speaker 01:
It's just one start to the analysis.

[00:15:04] Speaker 04:
This is Judge Raina.

[00:15:05] Speaker 04:
I think we understand that.

[00:15:06] Speaker 04:
I think we understand the difference between the affiliation under the statute and then collapsing under the regulation.

[00:15:13] Speaker 04:
You were saying, though, about finding active manipulation or price or production, but is that really accurate?

[00:15:23] Speaker 04:
Isn't that

[00:15:24] Speaker 04:
that the factors in the regulation are designed to find a significant potential for manipulation.

[00:15:34] Speaker 01:
I'm sorry.

[00:15:35] Speaker 07:
Please proceed.

[00:15:37] Speaker 01:
I'm trying to turn up the volume.

[00:15:39] Speaker 01:
Hold on.

[00:15:40] Speaker 01:
I had a little bit of trouble hearing you.

[00:15:44] Speaker 01:
Sir, would you please repeat your question, Your Honor?

[00:15:48] Speaker 04:
Okay.

[00:15:49] Speaker 04:
In your argument, you were

[00:15:52] Speaker 04:
You were saying that the collapsing regulation must lead to a finding of actual manipulation or active manipulation of price or production.

[00:16:07] Speaker 04:
That's what I understood you were saying.

[00:16:08] Speaker 04:
But is that really accurate?

[00:16:10] Speaker 04:
I mean, in the United States steel form versus the United States, we said that it's a significant potential for manipulation of price or production.

[00:16:26] Speaker 01:
In the China Steel case, sir?

[00:16:30] Speaker 04:
In the United States Steel Corporation versus United States 160.

[00:16:41] Speaker 04:
That's the 1114.

[00:16:43] Speaker 04:
That's a CIP case.

[00:16:47] Speaker 04:
But anyway, in that case, this stands for the proposition that commerce doesn't need to find all the factors in the regulation

[00:16:54] Speaker 04:
present to find, quote, a significant potential for manipulation of price or production.

[00:17:00] Speaker 04:
And you seem to be arguing that the factors must find active and active ongoing.

[00:17:11] Speaker 01:
An active business interactions with the company such that they have the possibility to influence one another.

[00:17:21] Speaker 01:
As opposed to something on paper that is more static, like a family relationship.

[00:17:27] Speaker 01:
Affiliation is my argument, or at least our argument, is that affiliation is the first step in the collapsing test.

[00:17:38] Speaker 01:
But commerce's responsibility, commerce is bound by statute too.

[00:17:44] Speaker 01:
look further or bound by at least their regulations to look further into actual active evidence of intertwined operations like Mr. Cameron was referring to earlier when he talked about verification and how minuscule the actual actively intertwined operations between these companies really are.

[00:18:10] Speaker 04:
Okay.

[00:18:12] Speaker 04:
That's fine.

[00:18:13] Speaker 04:
I understand.

[00:18:14] Speaker 01:
Thank you.

[00:18:15] Speaker 07:
Okay.

[00:18:16] Speaker 07:
All right.

[00:18:17] Speaker 07:
Let's hear from the other side and we'll save the rebuttal for you as well.

[00:18:21] Speaker 01:
Thank you.

[00:18:24] Speaker 07:
Okay.

[00:18:24] Speaker 07:
We're ready for Mr. Schneiderman.

[00:18:29] Speaker 05:
Thank you, Your Honor.

[00:18:30] Speaker 05:
I thought Ms.

[00:18:31] Speaker 05:
Speck would proceed first and then I would follow up.

[00:18:34] Speaker 07:
Whatever you prefer.

[00:18:35] Speaker 08:
Yes, Your Honor.

[00:18:39] Speaker 08:
I look at the specs for the United States, and may it please the court, we respectfully request that the court affirm the trial court's decision.

[00:18:47] Speaker 08:
And I'm here only to argue about the collapsing analysis.

[00:18:51] Speaker 08:
We did not participate in the cross-appeal.

[00:18:54] Speaker 02:
Your Honor, as we- When you collapse in NYC, you're doing that because there's a potential for manipulation as a result of the control

[00:19:07] Speaker 02:
that YP might exercise over SIN.

[00:19:09] Speaker 02:
Is that correct?

[00:19:11] Speaker 08:
Yes, Your Honor.

[00:19:12] Speaker 08:
Here, commerce found an independent factual basis to collapse YP and SIN and an independent factual basis to collapse prosperity and SIN.

[00:19:23] Speaker 02:
OK, but if the question is whether prosperity can control SIN and use it to manipulate,

[00:19:30] Speaker 02:
Why isn't it important that Commerce also consider the combined entity of SIN and YP in that analysis, which it declined to do?

[00:19:42] Speaker 08:
Your Honor, Commerce explained this, and this is Appendix Page 39, that the regulation doesn't require any particular sequencing and that doing a particular order would overlook the evidence supporting collapsing as between posterity and SIN.

[00:19:59] Speaker 08:
And so here, commerce felt that even if the other two, YP and prosperity, couldn't be collapsed.

[00:20:06] Speaker 08:
And again, as he's explained in appendix pages 39 and 40, he cut, it was appropriate to look at collapsing the case based on the potential of those two companies to control SIN.

[00:20:18] Speaker 02:
I'm having trouble understanding that.

[00:20:20] Speaker 02:
If you're interested in the question of control and potential manipulation,

[00:20:25] Speaker 02:
Why wouldn't you consider the relationship between prosperity and the combined SIN-YP entity?

[00:20:36] Speaker 08:
Your Honor, as Commerce explained, that would overlook the... I mean, here we have companies that it's undisputed that YP and

[00:20:45] Speaker 08:
SIN should be collapsed and there is substantial evidence in the record supporting that prosperity TA and SIN should be collapsed.

[00:20:53] Speaker 08:
And so Commerce was looking at the ability of these various companies to shift production and the fact that... I'm sorry, I don't think you're answering my question.

[00:21:03] Speaker 02:
My question is why are you not interested in whether prosperity has the ability to manipulate

[00:21:13] Speaker 02:
price of production potentially with respect to the combined entity as well as looking at the prosperity-sin relationship.

[00:21:23] Speaker 02:
Why don't you look at the combined entity because you consider that they should be collapsed, that is, sin and YP.

[00:21:32] Speaker 02:
Your Honor, as a threshold matter, the regulation does not, the statute does not address this at all, and the regulation does not require... Yeah, but I'm asking you to tell me, as a practical matter, why do you ignore the relationship between prosperity and the combined entity?

[00:21:48] Speaker 02:
Why?

[00:21:48] Speaker 02:
What's the justification for that?

[00:21:52] Speaker 08:
The justification, as explained in 39-40 of the appendix, is because it would overlook

[00:21:59] Speaker 08:
of evidence supporting collapsing prosperity and sin, and it was overlooked that basically the idea here is that these two companies had the potential to control sin.

[00:22:09] Speaker 08:
And that was, again, looking at each individual factual basis as commerce is permitted to do under the regulation, which doesn't require any particular aggregation or otherwise require a particular order or sequencing.

[00:22:24] Speaker 04:
This is Judge Reyna.

[00:22:26] Speaker 04:
I'm also finding that little

[00:22:28] Speaker 04:
I'm unable to understand why the collapsing process, the different steps to examine, to analyze, to collapse, why that didn't happen when we collapsed Prosperity and the other two companies that came out with the single entity.

[00:22:46] Speaker 04:
It seems to me you skipped it.

[00:22:47] Speaker 04:
You leapfrogged your own regulations.

[00:22:52] Speaker 08:
No, Your Honor, we respectfully submit, yes, commerce did initially collapse YP and SIN, but commerce explained, and this is in the appendix at 12817, that it would continue to examine whether to collapse prosperity TA.

[00:23:10] Speaker 08:
And commerce then, again, commerce is, preliminary determination is nearly preliminary, and commerce can change its mind so long as it provides a reason for doing so.

[00:23:20] Speaker 08:
Here, the appendix 17570-74 explains the parties were aware that commerce would be looking at this.

[00:23:30] Speaker 08:
And commerce explained the reasons why, again, the potential for each of these companies to control SIN in its final determination.

[00:23:38] Speaker 08:
And that is at 17575-76.

[00:23:40] Speaker 08:
And then also, it was extensively dealt with in the remand determination.

[00:23:46] Speaker 08:
And so, again, the fact that this was preliminarily, at that time, commerce hadn't conducted verification.

[00:23:53] Speaker 08:
In this court, I haven't cited these cases, but certainly can if the court would like supplemental briefing.

[00:23:59] Speaker 08:
A preliminary determination is just that.

[00:24:01] Speaker 08:
It does not obligate commerce to follow a particular order or sequence or to aggregate why she incends when looking at its ultimate coaxing determination.

[00:24:14] Speaker 02:
But why wouldn't you look when you're trying to decide whether prosperity can control sin and cause manipulation, why do you ignore the relationship between sin and YP, which has been held to be sufficiently close that they've been collapsed?

[00:24:32] Speaker 02:
Why would you ignore that?

[00:24:36] Speaker 08:
Your Honor, because it would overlook the potential for manipulation between prosperity and sin.

[00:24:40] Speaker 08:
Here, we would submit substantial evidence in the record support that the totality of the circumstances supports that examining the culmination of factors demonstrates the significant potential for manipulation between prosperity and sin, pardon me, the significant ownership.

[00:24:58] Speaker 02:
Yeah, but nobody's suggesting that you can't look at the relationship between prosperity and sin.

[00:25:04] Speaker 02:
The suggestion is you also need to look at the entire relationship, the totality of the circumstances involving YP as well.

[00:25:14] Speaker 08:
Yes, Your Honor, but this is a commerce, again, the regulation does not, we would submit that the portions of the FQ that the appellant cite, again, do not require that type of aggregation.

[00:25:28] Speaker 08:
They cited that the secretary will treat two or more affiliated producers as a single entity where those producers, that language simply doesn't require an aggregation or a sequencing.

[00:25:40] Speaker 08:
And here, again, given the significant discretion that commerce is afforded in this area with this list of non-exhaustive factors, commerce only needs to determine a reasonable approach.

[00:25:55] Speaker 08:
And here, even if the court would have perhaps done it differently, it does not render a commerce's approach looking at the ability of these two companies to control sin unreasonable, or each company individually and the independent, dependent factual basis to control sin in examining the potential for manipulation under the totality of the circumstances.

[00:26:18] Speaker 08:
And Your Honor, I wanted to address briefly, Your Honor, I wanted to address briefly the argument both appellants have

[00:26:26] Speaker 08:
highlighted this idea that they were, that prosperity subsequently divested its shares of sin.

[00:26:33] Speaker 08:
And again, as the trial court recognized and as commerce explained in its remand determination, this did occur after

[00:26:40] Speaker 08:
the period of investigation.

[00:26:42] Speaker 08:
Here the period of investigation was April 1, 2014 through March 31, 2015, and the divestment occurred in December of 2015.

[00:26:52] Speaker 08:
Commerce has an established practice of not looking at the post-period of investigation activity for purposes of collapsing.

[00:26:59] Speaker 08:
And again, the only way Commerce can depart from an established practice is to identify compelling reasons to do so, and none has been presented here.

[00:27:08] Speaker 08:
And here it's appropriate as commerce also has a longstanding practice to look at the information presented in each segment of proceeding which commerce did and appropriately examined the divestment during the first administrative review.

[00:27:23] Speaker 07:
So your theory then is that this would be relevant for administrative review but not retroactive?

[00:27:31] Speaker 08:
Yes, Your Honor.

[00:27:32] Speaker 08:
Again, that would be at odds with Congress's established practice of only looking at information during the period of investigation for purposes of collapsing.

[00:27:41] Speaker 08:
That was cited on page 33 and 34 of our brief with steel concrete reinforcing bars from the Republic of Korea.

[00:27:49] Speaker 08:
And again, that the policy in part is collapsing its forward-looking, but it's also to ensure, as explained in the Queen's Flowers case, that Commerce is examining the entire entity during the period of investigation, and that is what Commerce has done here.

[00:28:04] Speaker 08:
Again, I don't believe the appellants have identified any record information suggesting that they, that this was brought up anywhere other than at verification.

[00:28:14] Speaker 08:
And again, it was post period of investigation, which wouldn't have meaningfully given commerce time to examine the arm's length nature of the transaction.

[00:28:23] Speaker 08:
And that's why it's more appropriately done during the first administrative review.

[00:28:27] Speaker 07:
Okay.

[00:28:27] Speaker 07:
Does the panel have any more questions from the spec?

[00:28:32] Speaker 05:
No.

[00:28:33] Speaker 07:
Okay, then we'll hear from Mr. Schneiderman.

[00:28:36] Speaker 05:
Thank you, Your Honor.

[00:28:37] Speaker 05:
I'm Dan Schneiderman.

[00:28:38] Speaker 05:
I represent AK Steel, which is a defendant across the town.

[00:28:42] Speaker 05:
I'd like to start by addressing the collapsing issue and then move over to our cross appeal.

[00:28:47] Speaker 05:
I'd like to start by mentioning that I agree with the government that collapsing decisions were dealing with a concurrent analysis of collapsing three entities.

[00:28:56] Speaker 05:
Nobody complained

[00:28:58] Speaker 05:
when the government analyzed the relationships between Yifui, YP, and SIN independently.

[00:29:04] Speaker 05:
It didn't consider PT as part of that analysis.

[00:29:06] Speaker 05:
In other words, it considered each of these relationships independently, and it decided to collapse YP with SIN.

[00:29:14] Speaker 05:
It did the same analysis with YP, with prosperity and SIN.

[00:29:20] Speaker 05:
And I think it's appropriate, you know, the question came up about manipulation.

[00:29:26] Speaker 05:
In this case, it was demonstrated that during the POI and prosperity engaged in, it had very highly intertwined operations in the sense that when SIN's operations were down, they were able to shift production to PT.

[00:29:45] Speaker 05:
In other words, those two entities were effectively acting as a coordinated unit in terms of their production.

[00:29:52] Speaker 05:
And this gets to the heart of why collapsing is important for purposes of the dumping calculations.

[00:29:58] Speaker 05:
When you have entities that are acting as a coordinated unit, it's very important that, and they have the ability to shift production among their various facilities, you don't want to assign different dumping margins to those different facilities because what you'll find is that those facilities can just shift production and supply the US market from the facility that has the lowest rate.

[00:30:20] Speaker 05:
So for example, in this case, if you were to sign a separate rate for sin and prosperity, the entities could shift production among them by the US market from the facility with the lowest rate.

[00:30:32] Speaker 05:
So that's sort of the potential for manipulation that we're concerned about.

[00:30:36] Speaker 05:
And that's the reason why it's appropriate to have a single rate assigned to both.

[00:30:40] Speaker 05:
And I would point out that,

[00:30:41] Speaker 05:
You know, once you've decided that SIN has to be collapsed with both of its owners, in other words with both YP and PT, you've already essentially created a tripartite entity.

[00:30:54] Speaker 05:
There's no further requirement for commerce to analyze the intertwined operations between YP and PT independently.

[00:31:03] Speaker 05:
And in fact, I don't even think anybody suggested that analysis.

[00:31:08] Speaker 04:
This is Judge Raina.

[00:31:09] Speaker 04:
I don't understand why that's the case.

[00:31:11] Speaker 04:
It seems to me that if you're looking to collapse entities, you go to the regulation, and regulation is pretty clear what type of, what degree of the relationships between the different entities have to be in order for them to be collapsing.

[00:31:26] Speaker 04:
You seem to be arguing that you can only rely, you can rely on indirect relationship in order to collapse entities.

[00:31:34] Speaker 04:
And it seems to me that the regulation requires more than that.

[00:31:37] Speaker 05:
Well, Your Honor, thank you.

[00:31:40] Speaker 05:
I believe the regulation would require, in other words, if you've already decided that based on the relationship, SIN has to be collapsed with two other entities, then you've already created one tripartite entity.

[00:31:53] Speaker 05:
In other words, and this happens frequently, where you have, for example, one respondent with multiple subsidiaries, Amherst analyzes the relationship between that respondent and each subsidiary.

[00:32:02] Speaker 05:
I don't think it engages in a separate analysis looking at each subsidiary relative to each

[00:32:07] Speaker 05:
and the intertwined operations there.

[00:32:09] Speaker 05:
So I think once you've created a group, I don't think there's a requirement, and they're all properly collapsed on that basis.

[00:32:18] Speaker 05:
I don't think there's a further requirement to look at each member within the group relative to each other.

[00:32:22] Speaker 04:
And it could also mean... Are you saying the conference doesn't have to even justify this decision to collapse multiple entities?

[00:32:33] Speaker 05:
Well, I mean, I think it did.

[00:32:35] Speaker 05:
Certainly, nobody's complaining that SIN was collapsed with YIFUI.

[00:32:42] Speaker 05:
And again, without considering PT as part of that analysis, I don't see then why it should be any different when SIN is collapsed with YP.

[00:32:51] Speaker 05:
And again, all three entities can shift production through SIN.

[00:32:55] Speaker 05:
In other words, if different margins are being applied to the different entities, both YP and PT

[00:33:02] Speaker 05:
can shift their production to SIN in order to manipulate production and essentially manipulate the dumping one.

[00:33:13] Speaker 02:
Let me give you a hypothetical.

[00:33:14] Speaker 02:
Suppose YP decides to funnel its production through SIN.

[00:33:21] Speaker 02:
Isn't that possible that it might make it more difficult for prosperity to funnel its production through SIN?

[00:33:28] Speaker 02:
Isn't that a potentially relevant consideration?

[00:33:32] Speaker 05:
Well, Your Honor, I mean, presumably both entities could funnel their sales through SIN.

[00:33:38] Speaker 02:
I suppose the question is... Isn't it possible that if YP is controlling SIN and using it to funnel production, that that might make it more difficult for prosperity to funnel production through SIN?

[00:33:53] Speaker 05:
Well, presumably, the three entities, all of which are affiliated, would be acting in concert and making decisions about the most efficient way to circumvent the US dumping laws and avoid dumping to the maximum extent possible.

[00:34:05] Speaker 05:
Presumably, that coordination would take place.

[00:34:12] Speaker 05:
Even if they're capacity constraints, I could understand that the entities could engage in tolling arrangements such that ultimately SIN is the exporter, but the other two would toll for it.

[00:34:23] Speaker 05:
So there are many ways that that could be worked around, knowing that these are all affiliated companies.

[00:34:29] Speaker 07:
The appellant says that this is really speculative and that commerce needed to determine what was actually happening, not just what the potential might be.

[00:34:41] Speaker 07:
Is there an answer to that?

[00:34:43] Speaker 05:
Well, there is, and the commerce found that there was actual intertwined operations, both between YP and SIN and between PT and SIN.

[00:34:51] Speaker 05:
And if I could just briefly address the cross-appeal issue, Your Honor.

[00:34:54] Speaker 07:
Yes, please do.

[00:34:57] Speaker 05:
Okay.

[00:34:57] Speaker 05:
This addresses the yield strength characteristics, which was misreported by Prosperity.

[00:35:02] Speaker 05:
And just a little bit of background, frozen resistant steel is sold to industry standard specifications, which are set by organizations like the ASTM,

[00:35:12] Speaker 05:
And there's actually a field that's required to be reported by all respondents, which is called the specification field, which requires the reporting of the ASTM or industry standard specification.

[00:35:25] Speaker 05:
PT actually properly reported the industry specifications in that field.

[00:35:30] Speaker 05:
So for example, you'd see an ASTM A653 SS80.

[00:35:34] Speaker 05:
The SS80 indicates the minimum yield strength ASI.

[00:35:41] Speaker 05:
Go.

[00:35:41] Speaker 07:
Continue.

[00:35:42] Speaker 05:
The questionnaire is very clear that when there's another characteristic, which is called the yield strength characteristic, the questionnaire was very clear that the respondent had to use the industry specification as the basis to report the yield strength.

[00:35:56] Speaker 05:
And it says, and I quote from the third paragraph of the instruction, it says, if no requirements or guidance on minimum specified yield strength is included in the specification of the product in question, end quote, then the respondent has to resort to some other method to report the yield strength.

[00:36:11] Speaker 05:
Here, there were six specifications, all six of which were ASTM industry standard specifications, most of which said SS80 in the title, which has the minimum specified yield strength in the specification itself.

[00:36:24] Speaker 05:
The plain language of the question required that they report on that basis.

[00:36:29] Speaker 05:
And PT said, well, when we reported the yield strength, we didn't look to the industry standard.

[00:36:34] Speaker 05:
We looked to our internal mechanical property code.

[00:36:37] Speaker 05:
which showed that for these specifications, we actually made these to a stronger strength characteristic, in other words, exceeding 80,000 PSI, and that's how we reported it.

[00:36:46] Speaker 05:
But the problem is that the questionnaire requires that they report based on the, quote, specification, not some proprietary internal code.

[00:36:54] Speaker 05:
Now, I understand that the trade court below suggested that the meaning of the term specification in the questionnaire was itself ambiguous, and that it could just as easily refer to a manufacturer's internal specification

[00:37:06] Speaker 05:
rather than the industry standard.

[00:37:08] Speaker 05:
But this doesn't make any sense because the term specification was already defined up above in the questionnaire.

[00:37:15] Speaker 05:
Again, there's a separate field in the questionnaire for specification, and ET properly reported those specifications using the industry standards.

[00:37:24] Speaker 07:
But how did that affect the result if they actually had a stronger product?

[00:37:32] Speaker 07:
than the specification.

[00:37:34] Speaker 05:
Your Honor, you're right.

[00:37:35] Speaker 05:
If a product has a specified minimum yield strength of 80,000 PSI, you're always going to produce that product with something exceeding 80,000, because 80,000 is the minimum threshold.

[00:37:46] Speaker 05:
The actual strength is almost always going to be quite a bit higher than that.

[00:37:50] Speaker 05:
But the way commerce required these products to be coded for anti-dumping purposes is that you report the minimum specifications.

[00:37:57] Speaker 05:
So in other words,

[00:37:58] Speaker 05:
Even in their actual records, the actual strength may be significantly higher than 80,000, but you weren't supposed to code it that way.

[00:38:05] Speaker 05:
In other words, you don't code based on the actual strength.

[00:38:08] Speaker 05:
You code for different purposes based on the specified minimum strength.

[00:38:13] Speaker 07:
So in this case... How would this affect the dumping margin?

[00:38:16] Speaker 07:
That's how I don't understand.

[00:38:17] Speaker 05:
Well, it's very important, Your Honor, because for the six specifications at issue, they should have been coded

[00:38:25] Speaker 05:
in a category of products with a minimum specified yield strength of 65,000 up to and including 80,000.

[00:38:33] Speaker 05:
In other words, that's part of the condom.

[00:38:36] Speaker 05:
It's one grouping.

[00:38:38] Speaker 05:
But prosperity didn't report it that way.

[00:38:40] Speaker 05:
In fact, it took these six specifications and it placed them into a separate grouping of other products that had a yield strength, minimum specified yield strength over 80,000 CSI.

[00:38:50] Speaker 05:
So in other words, it just coded these products into the wrong grouping.

[00:38:54] Speaker 05:
And so as a result of that, the condom was incorrect, and as a result, Commerce did not have correct cost information for those condoms.

[00:39:03] Speaker 05:
In other words, there was a gap in the record.

[00:39:05] Speaker 05:
And of course, that was the, you know, the trade court ultimately found, well, no, there's no gap because Prosperity didn't misreport in the first place.

[00:39:14] Speaker 05:
But Commerce's finding of a misreporting clearly is supported by substantial evidence because, as I mentioned, the questionnaire is clear

[00:39:21] Speaker 05:
that you have to report the minimum specified yield strength based on the specification at issue.

[00:39:26] Speaker 05:
And the specification can't mean the industry standard at field 2.3, which is at appendix page 5202, and then mean the internal manufacturer code at field 3.7.

[00:39:39] Speaker 05:
And in fact, if you look at PT's response, it's very clear that they understood

[00:39:45] Speaker 05:
that the ASTM spec for each of these, and they even reported in their chart that the minimum specified yield strength for each was 80,000 psi.

[00:39:54] Speaker 05:
I think they just made it a mistake, and what happened was they accidentally relied on their manufacturer code, which indicated an actual yield strength in lieu of the industry standard, which they were supposed to use.

[00:40:05] Speaker 05:
And as I said, as a result, that was discovered at verification, and there was a resulting gap in the record.

[00:40:11] Speaker 05:
So our position is that there was a misreporting and that commerce is finding that there was a misreporting is supported by substantial.

[00:40:19] Speaker 07:
Okay.

[00:40:20] Speaker 07:
Any more questions for Mr. Schneiderman?

[00:40:24] Speaker 07:
We'll proceed with the rebuttal.

[00:40:30] Speaker 07:
Thank you, Your Honor.

[00:40:31] Speaker 07:
Let's see.

[00:40:32] Speaker 07:
Okay.

[00:40:32] Speaker 07:
Mr. Cameron.

[00:40:34] Speaker 03:
Thank you, Your Honor.

[00:40:36] Speaker 03:
Don Cameron.

[00:40:36] Speaker 03:
First, let me address the yield strength.

[00:40:39] Speaker 03:
Yes.

[00:40:41] Speaker 03:
They state that the commerce instructions, quote, very clearly require the reporting of the applicable minimum specified yield strength as published by the standards organization such as ASPM, unquote.

[00:40:55] Speaker 03:
Well, it's interesting that in none of their briefs did they entirely quote the questionnaire in question because it's not true.

[00:41:03] Speaker 03:
It doesn't say that.

[00:41:04] Speaker 03:
As the lower court correctly found, the instructions do not say that.

[00:41:09] Speaker 03:
And the lower court gives the entire instruction.

[00:41:13] Speaker 03:
And it doesn't require prosperity to use a standards organization.

[00:41:18] Speaker 03:
They say that our manufacturing code is an actual yield strength.

[00:41:22] Speaker 03:
No, it specifies our minimum yield strength.

[00:41:25] Speaker 03:
And it says the minimum yield strength for that yield strength is greater than 80,000.

[00:41:31] Speaker 03:
What we are discussing here is the difference between equal to

[00:41:36] Speaker 03:
80,000 or greater than 80,000 as a minimum.

[00:41:41] Speaker 03:
And yes, that's correct.

[00:41:43] Speaker 03:
Our minimum standard in our internal code was greater than ASTM because it was a more stringent standard and that is exactly what we reported.

[00:41:57] Speaker 03:
That's the way PT understood it.

[00:42:00] Speaker 03:
It followed its manufacturing property code.

[00:42:03] Speaker 03:
It was verified by Commerce.

[00:42:05] Speaker 03:
There was nothing that wasn't verified by Commerce.

[00:42:08] Speaker 03:
The applicable code that we used was also verified, and it was greater than 80,000 PSI, and the Commerce Department verified that as well.

[00:42:18] Speaker 03:
So the only issue before this Court is whether Commerce

[00:42:22] Speaker 03:
quote, clearly instructed, as petitioner contends, that respondents use minimum specified yield strength based on the standards organization, such as ASPM and not internal standards.

[00:42:36] Speaker 03:
And it didn't.

[00:42:37] Speaker 03:
And to suggest that the manufacturer code that we use is somehow an actual yield strength ignores the exhibit.

[00:42:47] Speaker 03:
The exhibit clearly says that it's greater than 80,000

[00:42:51] Speaker 03:
Heck, we had yield strength that went up to 120,000 PSI.

[00:42:55] Speaker 03:
And the whole purpose is to be able to compare light to light products.

[00:43:03] Speaker 03:
So that's our answer to that, and we did lay it out in our brief.

[00:43:07] Speaker 03:
If I could just very briefly address, respond to the government.

[00:43:14] Speaker 03:
Unless there are other questions on this, I apologize.

[00:43:17] Speaker 07:
I'll proceed.

[00:43:19] Speaker 03:
Thank you.

[00:43:21] Speaker 03:
The government suggests that, well, the reason that we didn't analyze prosperity in relation to the YPCM entity is the regulations don't require us to do it and we follow the regulations and do what we have to do.

[00:43:38] Speaker 03:
And we don't agree with that, Your Honor.

[00:43:40] Speaker 03:
We believe that the regulations do require that.

[00:43:43] Speaker 03:
The regulations say those producers, what are those producers?

[00:43:48] Speaker 03:
Those producers in 401, in what is it, 401, 351, 401F, those producers are the producers to be, that are to be collapsed, right?

[00:44:06] Speaker 03:
It doesn't say some of the producers that are to be collapsed.

[00:44:09] Speaker 03:
It doesn't say you can analyze part of the, part of the, what you're going to collapse.

[00:44:14] Speaker 03:
It says those producers, those producers that you were going to collapse.

[00:44:18] Speaker 03:
And commerce didn't do that.

[00:44:20] Speaker 03:
Secondly, it says, and there is a significant potential for manipulation of price or production.

[00:44:28] Speaker 03:
Well, let me ask you a question.

[00:44:30] Speaker 03:
Does it?

[00:44:31] Speaker 03:
I'm sorry.

[00:44:32] Speaker 03:
I thought I heard a question.

[00:44:38] Speaker 07:
Please continue with your thought.

[00:44:41] Speaker 03:
All I was going to say was when you're looking at the potential of price manipulation, it makes a huge difference whether you are looking at a figment of the collapsed entity, i.e.

[00:44:55] Speaker 03:
sin, of which, yes, we agree, we own 20% of sin.

[00:45:00] Speaker 03:
or the collapsed entity that commerce collapsed us into, which was the YPCN entity, of which that ownership interest became 1% and any interaction that we had was minuscule.

[00:45:14] Speaker 03:
Thank you very much.

[00:45:15] Speaker 03:
I appreciate your time, your patience, and the trying times that you're going through.

[00:45:21] Speaker 07:
Thank you.

[00:45:21] Speaker 07:
Okay.

[00:45:21] Speaker 07:
Thank you.

[00:45:22] Speaker 07:
Now, Ms.

[00:45:22] Speaker 07:
Slater, you have one minute.

[00:45:29] Speaker 01:
Hi.

[00:45:29] Speaker 01:
This is Kelly Slater.

[00:45:31] Speaker 01:
I think the judge made, one of the judges at least, I'm not quite sure which one, but the idea that commerce leapfrogged the regulations is particularly interesting.

[00:45:46] Speaker 01:
And I just want to follow up on that.

[00:45:49] Speaker 01:
The policy behind commerce's collapsing test in trade investigations is to prevent the potential manipulation of price

[00:46:00] Speaker 01:
and production between affiliates, especially if one affiliate receives a more advantageous dumping rate over another.

[00:46:09] Speaker 01:
This policy would not be useful if the affiliates are not found to be dumping when the dumping calculation is done individually for each company.

[00:46:23] Speaker 01:
In commerce's preliminary analysis,

[00:46:28] Speaker 01:
Neither prosperity nor Yau Kuei were found to have engaged in dumping.

[00:46:39] Speaker 01:
So collapsing these three entities was the only way for Commerce to achieve an affirmative dumping order on corrosion resistant steel products from Taiwan.

[00:46:53] Speaker 01:
Without that element of Commerce's decision, we would not

[00:46:58] Speaker 01:
even be here arguing today.

[00:47:00] Speaker 01:
Thank you.

[00:47:01] Speaker 07:
Okay.

[00:47:02] Speaker 07:
Thank you.

[00:47:03] Speaker 07:
Any more questions from the panel?

[00:47:07] Speaker 07:
All right.

[00:47:08] Speaker 07:
And this case is submitted.

[00:47:10] Speaker 07:
Thank you all.

[00:47:11] Speaker 01:
Thank you.