[00:00:00] Speaker 01:
1932, Meyer Corporation versus United States.

[00:00:05] Speaker 01:
Mr. Peterson, please proceed.

[00:00:09] Speaker 04:
Good morning, Your Honors, and may it please the Court.

[00:00:13] Speaker 04:
There are three self-sufficient errors of law made by the Court of International Trade in this case, any one of which requires this Court to vacate the CIT's decision on customs valuation and remand the case.

[00:00:27] Speaker 04:
First, the CIT improperly injected unfair trade remedy requirements into the customs valuation law.

[00:00:36] Speaker 04:
Second, the lower court improperly abandoned the regulatory test for determining the acceptability of related party prices for customs value.

[00:00:46] Speaker 04:
And third, the court failed to discharge its obligation to determine the correct dutyable value in accordance with the requirements imposed by this court's 1984 decision

[00:00:57] Speaker 04:
in Jarvis-Clark versus United States.

[00:01:01] Speaker 04:
If I could turn to the first of these errors.

[00:01:05] Speaker 04:
While this court in Nisho Iwai said that we must- I'm sorry.

[00:01:10] Speaker 03:
No, go ahead, Judge.

[00:01:13] Speaker 05:
In the event we were to agree with you, for example, on your first point, and think that the PRC NME construct infected the entire analysis and sent it back,

[00:01:23] Speaker 05:
That would be wide the need to deal with the Jarvis Clark issue at this time, correct?

[00:01:27] Speaker 05:
Yes.

[00:01:28] Speaker 05:
That's what I thought.

[00:01:29] Speaker 05:
Thank you.

[00:01:29] Speaker 03:
Yes, sir.

[00:01:30] Speaker 03:
I was going to ask the same thing.

[00:01:32] Speaker 03:
OK.

[00:01:33] Speaker 04:
Well, see, the problem, the first problem, is they injected these unfair trade remedy concepts.

[00:01:39] Speaker 04:
And you can see it on page 16 of the Court's opinion.

[00:01:42] Speaker 03:
I mean, I'm not particularly interested in hearing from you on that.

[00:01:45] Speaker 03:
I think you probably have the better of that argument.

[00:01:49] Speaker 03:
And if we don't have to reach them, we don't have to reach them.

[00:01:53] Speaker 03:
But I am a little interested in hearing what you think the remand is going to look like if we vacate and remand on that issue.

[00:02:00] Speaker 03:
Is it going to have to go back, and customs is going to say the documentation you provided for this first sale is insufficient, and you're going to get argued it is sufficient, and that's where it's going to go?

[00:02:12] Speaker 04:
Well, on page 16 of its opinion, the court says that we had the burden of not only proving that the relationship between buyer and seller didn't influence the price,

[00:02:23] Speaker 04:
but said we had the burden of demonstrating that inputs from the PRC.

[00:02:27] Speaker 03:
No, no, no.

[00:02:29] Speaker 03:
Let's just assume we agree with you on that.

[00:02:31] Speaker 03:
It seemed to me that the court also suggested that maybe you hadn't proven the arm's length.

[00:02:39] Speaker 03:
sufficiently even without that.

[00:02:41] Speaker 03:
It's hard to read it that way.

[00:02:42] Speaker 03:
But I guess what I'm saying is, on the remand, we're going to tell the CIT that they have to look at that issue anew, right?

[00:02:49] Speaker 03:
With the documentation you provided, I'm pretty sure Customs is going to get up and say they don't think that documentation, even without the PRC stuff, is sufficient.

[00:03:01] Speaker 03:
That's a question for the trial court, right?

[00:03:02] Speaker 03:
Well, yes.

[00:03:03] Speaker 04:
But if you remand it to the CIT, then this gets into the second area of error that we've identified.

[00:03:08] Speaker 05:
First of all, remand for a reconsideration on the existing record, or are you asking for a new trial?

[00:03:15] Speaker 04:
We would probably ask for a new trial.

[00:03:17] Speaker 04:
Why should you get that?

[00:03:19] Speaker 04:
We would probably be able to incorporate.

[00:03:21] Speaker 05:
For example, sir, it looks to me like Judge Aquilino is thinking that your client didn't meet the statutory additions.

[00:03:30] Speaker 05:
The add-ons?

[00:03:32] Speaker 05:
evidence that you've got to show that there are no statutory add-ons?

[00:03:35] Speaker 04:
There were no questions about assists or add-ons.

[00:03:38] Speaker 05:
When I'm reading the opinion, you say there's no question, but he says there's no evidence.

[00:03:42] Speaker 05:
So I don't know whether that's an independent ground.

[00:03:46] Speaker 05:
I mean, for my money, the briefing on this case is sort of what you'd call

[00:03:51] Speaker 05:
Occasional, I mean, issues arise and then they aren't closed.

[00:03:54] Speaker 05:
The door isn't closed no matter whether something happens.

[00:03:57] Speaker 05:
So what Judge Hughes was asking you is what, if we were to agree with you, the PRC and non-market economy stuff is out, and that can't be part of the analysis at all.

[00:04:10] Speaker 05:
The case goes back.

[00:04:12] Speaker 05:
And then the case, we have to decide whether there's a new trial or not.

[00:04:16] Speaker 05:
I don't understand.

[00:04:17] Speaker 05:
You say you want one, but I don't know why you should get one.

[00:04:21] Speaker 04:
Well, it could be for a new trial, or it could be for remand to the agency for further proceedings.

[00:04:28] Speaker 05:
Why isn't the record, I mean, the record as reflected in the, there have been proposed findings of fact by both sides, for sure.

[00:04:38] Speaker 05:
Because the opinion reads as if the proposed findings from both sides are just quoted.

[00:04:44] Speaker 05:
And clearly, there's no clear choice between the two.

[00:04:48] Speaker 05:
So the trial judge said, well, I'm sort of inclined to feel that the government's facts weigh a little more, but they didn't throw yours out as being unsupported by evidence at all.

[00:04:57] Speaker 04:
Yeah.

[00:04:57] Speaker 04:
Well, I think if you remand, you have to require a correction of a second error, which was that the court did not look at the relationship between buyer and seller.

[00:05:07] Speaker 04:
The proper test for comparing a related part of sale is set out in section 152.103 of the regulations.

[00:05:15] Speaker 04:
And it says you compare the profits earned on the sale of the goods undergoing appraisement to the profit realized over a representative period of time in sales of merchandise of the same class or kind.

[00:05:28] Speaker 05:
Well, if the case goes back, you don't have an opportunity to file a pretrial or a pre-consideration brief.

[00:05:35] Speaker 05:
And you'll be able to tell the judge what you think the law is and what they have to do, right?

[00:05:40] Speaker 04:
Where I think the court committed an error that this court should reverse and correct.

[00:05:44] Speaker 04:
is that the court seems to make its decision that we haven't made our burden of proof based on the absence of financial records of a holding company in the british virgin islands now that holding company sells no merchandise both parties agree on that but that wasn't the basis for the court's conclusion that's on review it may be the court reaches that same conclusion again

[00:06:07] Speaker 03:
But that's not before us if we vacate and remand because the PRC error injects, you know, taints this analysis.

[00:06:16] Speaker 03:
And the record isn't particularly great on this.

[00:06:18] Speaker 03:
I mean, and the reasoning of the district court doesn't go through this in a whole lot of detail.

[00:06:23] Speaker 03:
Why would we prejudge that issue without a new decision from the CIT, the trial court on this?

[00:06:31] Speaker 03:
And you can make those arguments again and see what happens.

[00:06:35] Speaker 04:
Well, the testimony of record indicates that our witness has testified that the parties.

[00:06:42] Speaker 03:
No, no, no, no.

[00:06:43] Speaker 03:
I understand.

[00:06:43] Speaker 03:
But you can't argue the evidence to us and ask us to make a conclusion.

[00:06:47] Speaker 03:
The government has a different view of that evidence and thinks it's insufficient.

[00:06:52] Speaker 03:
And we're not going to resolve that on appeal for the first time.

[00:06:56] Speaker 03:
That needs to go back to the trial court to resolve.

[00:06:59] Speaker 04:
Well, the fact of the matter is, Your Honor, the lower court never made a decision.

[00:07:03] Speaker 03:
Isn't that exactly why it needs to go back to the trial court?

[00:07:07] Speaker 04:
It never decided that the relationship of the buyers and sellers influenced the price.

[00:07:12] Speaker 04:
The lower court never said the related party price was too low or too high.

[00:07:17] Speaker 03:
Right.

[00:07:17] Speaker 03:
Never made a finding on it.

[00:07:18] Speaker 03:
So you could argue that to him when it goes back.

[00:07:21] Speaker 03:
Oh, yes, we would.

[00:07:22] Speaker 03:
And that's what we heard in the testimony.

[00:07:23] Speaker 03:
You're getting what seems to be, I mean, I'm not going to preview it altogether, but it seems to me you're winning on the PRC issue.

[00:07:31] Speaker 03:
I don't understand why you're asking us to go further and prejudge the ultimate outcome of what we said needs to be either a new trial.

[00:07:39] Speaker 04:
Yeah, I would not ask the court to prejudge the outcome.

[00:07:42] Speaker 05:
Home in on the key issue.

[00:07:45] Speaker 05:
My reading in your brief is that you don't believe that NISO, I can't pronounce it,

[00:07:50] Speaker 05:
created a separate independent non-market influence test.

[00:07:55] Speaker 05:
You believe that that language in the opinion where they're talking about non-market influence is a way of finding out whether or not the transaction was properly at arm's length.

[00:08:05] Speaker 04:
Right.

[00:08:05] Speaker 04:
You have to examine the conduct of the virus.

[00:08:07] Speaker 05:
So what I'm trying to say is the opinion you would like from us is an opinion saying,

[00:08:13] Speaker 05:
Trial court here doubled it.

[00:08:15] Speaker 05:
It made two mistakes.

[00:08:16] Speaker 05:
First, it thought there was an independent, separate factor in the analysis, which is looking at non-market effects.

[00:08:24] Speaker 05:
And then secondly, they took that language out of NISO and said, also, those non-market effects include China, non-market, et cetera.

[00:08:35] Speaker 04:
That's right, Your Honor.

[00:08:37] Speaker 05:
You would like us to say that the test coming out of NISO

[00:08:41] Speaker 05:
is basically that it has to be a Bonavati sale.

[00:08:44] Speaker 05:
It has to be made for purposes of export to the United States.

[00:08:48] Speaker 05:
And it has to be at arm's length.

[00:08:51] Speaker 04:
Exactly.

[00:08:51] Speaker 05:
And one way of testing of whether it's at arm's length is whether you ask whether there are any effects that are not marked as between the players in the chain that would affect the price.

[00:09:02] Speaker 04:
Right.

[00:09:02] Speaker 04:
Well, one way to check if it's at arm's length.

[00:09:04] Speaker 05:
To get to that.

[00:09:06] Speaker 05:
In this case, there's a holding company down in the islands someplace that owns everything, right?

[00:09:11] Speaker 00:
Right.

[00:09:12] Speaker 05:
The holding company owns the manufacturer, the middleman, the whole thing.

[00:09:16] Speaker 04:
Well, the holding company, I just want to get the structure.

[00:09:19] Speaker 04:
They held stock for manufacturing companies, for sales companies, for real estate.

[00:09:22] Speaker 05:
In this particular case, is the holding company owns everything that we're given, the manufacturer and the middleman?

[00:09:29] Speaker 04:
Yes.

[00:09:29] Speaker 05:
OK.

[00:09:31] Speaker 05:
And your argument basically is, well, the holding company is nothing.

[00:09:34] Speaker 05:
We shouldn't pay any attention to it.

[00:09:37] Speaker 05:
And the argument that it released was being made below to the judge was, well, that doesn't make any sense.

[00:09:42] Speaker 05:
The holding company that owns everything can influence all the people it controls.

[00:09:47] Speaker 05:
And it can, for example, tell people to do this and tell people to do that.

[00:09:52] Speaker 05:
And the holding company might be able to arrange through its bankers, because it's such a big thing, to get some sweetheart loans to the manufacturer.

[00:10:00] Speaker 04:
Right?

[00:10:01] Speaker 04:
Isn't that possible?

[00:10:04] Speaker 04:
It's possible, but it's unlikely.

[00:10:06] Speaker 01:
Just to be clear, isn't this the stuff that they're supposed to do on remand, not the stuff we're supposed to do now?

[00:10:13] Speaker 01:
Yes, Your Honor.

[00:10:13] Speaker 01:
I just want to make sure I'm on the right page.

[00:10:16] Speaker 05:
I just was pushing on you because you want, I think, us to write an opinion that says the CIT shouldn't be looking at the holding company.

[00:10:25] Speaker 04:
Well, I apologize if we've asked for two more, but I think that would be looked at again on retrial.

[00:10:29] Speaker 01:
OK, so let me just fast forward.

[00:10:32] Speaker 01:
Suppose we agreed with you that arm's length is the only criteria and that the court erred in adopting a second criteria.

[00:10:41] Speaker 01:
Do we then still have to decide, is still in front of us, the issue about whether the shells are a new and different article of commerce?

[00:10:50] Speaker 01:
Is that still part of the case that we need to decide, or is that somehow resolved by virtue of our remand?

[00:10:56] Speaker 04:
Well, I think it would be probably resolved by virtue of the remand.

[00:11:00] Speaker 04:
What, is that the GSP issue?

[00:11:02] Speaker 04:
Oh, no, no, not the GSP.

[00:11:04] Speaker 04:
The GSP issue is a separate issue.

[00:11:05] Speaker 04:
And the GSP is dependent on the outcome of the value issue.

[00:11:08] Speaker 05:
Why is that so?

[00:11:09] Speaker 05:
You make that argument in your reply brief.

[00:11:12] Speaker 04:
Yes.

[00:11:13] Speaker 05:
Right, in your reply a little late.

[00:11:15] Speaker 05:
Yes.

[00:11:15] Speaker 05:
But I would have thought that if we agreed that there was no second transformation,

[00:11:21] Speaker 05:
as a matter of fact, then your GSP claim false.

[00:11:25] Speaker 05:
That would be true.

[00:11:25] Speaker 05:
That would be true.

[00:11:26] Speaker 04:
Well, that would be true.

[00:11:28] Speaker 05:
So I didn't understand.

[00:11:29] Speaker 05:
I mean, your briefing, again, it puzzles me, governments, too.

[00:11:33] Speaker 05:
When you argue in your reply brief to say, oh, if we upset the valuation, you automatically get an entirely new analysis of GSP.

[00:11:44] Speaker 05:
Well, not on a substantial transformation.

[00:11:46] Speaker 05:
But you don't get that, right?

[00:11:47] Speaker 05:
And if we agree with the trial court.

[00:11:52] Speaker 05:
that you failed to meet the test on the second transformation, the GSP issue's over, right?

[00:11:57] Speaker 03:
I would say probably, yes, Your Honor.

[00:11:59] Speaker 03:
But the final point is that... But it's separate from the valuation issue, too, right?

[00:12:04] Speaker 03:
The substantial transformation part is... Because it's not exactly the same set of transactions, is it?

[00:12:12] Speaker 03:
No, no, no.

[00:12:12] Speaker 04:
It's a subset of... But ultimately, there's a 35% value content requirement that gets applied upon

[00:12:19] Speaker 03:
Whatever the right phrase value is determined to be honestly all we're trying to figure out at least what I think I'm trying to figure out is What we need to decide if we agree with you on the first issue, okay?

[00:12:29] Speaker 03:
And I think we don't have to go into the details about the holding company and all that that's for you on remand sure but give my sense from reading the briefs was I

[00:12:40] Speaker 03:
that the other issue, the double transformation issue, is separate and is still live and isn't affected necessarily by the valuation issue.

[00:12:50] Speaker 03:
So we should decide that.

[00:12:52] Speaker 03:
You can decide that, Your Honor, I think.

[00:12:53] Speaker 01:
Can?

[00:12:54] Speaker 01:
No.

[00:12:55] Speaker 01:
So I'm just going to try and rehabilitate you, because I'm giving up here.

[00:12:59] Speaker 01:
So I'm going to rehabilitate you in the following ways.

[00:13:01] Speaker 01:
Number one, you responded to Judge Clevenger, yes, it's only in our reply brief.

[00:13:05] Speaker 01:
in page 43 of your blue brief, you raised this GSP issue, correct?

[00:13:08] Speaker 01:
Yes, we did, Your Honor.

[00:13:09] Speaker 01:
Secondly, now let me just say, the GSP issue is a separate issue.

[00:13:13] Speaker 01:
Not that we can decide, because we actually don't get to pick and choose what we decide.

[00:13:16] Speaker 01:
You appealed it.

[00:13:18] Speaker 01:
It's separate and distinct from.

[00:13:19] Speaker 01:
This case is not resolved by virtue of our vacating or remaining on the arm's length transaction.

[00:13:24] Speaker 01:
And so we have to decide, don't we, in the GSP?

[00:13:26] Speaker 01:
Yes, Your Honor.

[00:13:27] Speaker 04:
If you decide it, then your decision will factor into applying a 35% test to whatever the final value is.

[00:13:35] Speaker 05:
Right.

[00:13:35] Speaker 05:
And if we decide on the GSP issue and say we agree that there was no second transformation, then the issue is over.

[00:13:42] Speaker 05:
Yes.

[00:13:43] Speaker 01:
Good.

[00:13:43] Speaker 05:
So we understand that.

[00:13:44] Speaker 01:
So why don't you now tell me why there are, in fact, two transformations?

[00:13:49] Speaker 01:
Why converting from

[00:13:51] Speaker 01:
Whatever it is you start with to a shell is one transformation, and then from a shell to the unfinished pots is a second transformation.

[00:13:58] Speaker 04:
Well, the government agreed that going from the disk to the shell was a single, substantial transformation.

[00:14:04] Speaker 04:
But that's not a consumer article.

[00:14:06] Speaker 04:
That's a producer article.

[00:14:07] Speaker 04:
You couldn't really cook food or handle a shelf.

[00:14:10] Speaker 04:
So from that point on, we do flattening.

[00:14:13] Speaker 04:
We do polishing.

[00:14:14] Speaker 05:
Well, you're right when there was no first transformation.

[00:14:17] Speaker 04:
No, the government concedes there's a first transformation.

[00:14:20] Speaker 05:
So the question is, is there a second?

[00:14:22] Speaker 04:
Yeah.

[00:14:22] Speaker 05:
And that's a fact question.

[00:14:24] Speaker 05:
And the question is, there's substantial evidence on the government side on that.

[00:14:29] Speaker 05:
Yes, Your Honor.

[00:14:29] Speaker 05:
Right.

[00:14:30] Speaker 05:
And so that's for us to decide.

[00:14:31] Speaker 04:
Yes.

[00:14:32] Speaker 05:
And it's all very well briefed, right?

[00:14:34] Speaker 04:
That's true.

[00:14:35] Speaker 05:
And you know that you have a high hill to climb on that standard of review.

[00:14:40] Speaker 04:
But bear in mind that when the case is remanded for new proceedings under the Jarvis Clark obligation,

[00:14:47] Speaker 04:
Even if the lower court finds the first sales are unacceptable, it has to examine the second sales, which it failed to do here.

[00:14:53] Speaker 04:
It could be entirely possible.

[00:14:56] Speaker 04:
It depends.

[00:14:56] Speaker 04:
I mean, if you prevail.

[00:14:58] Speaker 04:
If we prevail on first sale, then we're.

[00:15:00] Speaker 05:
If you prevail, then there's no Jarvis-Clark issue.

[00:15:03] Speaker 04:
No, but if we don't prevail, then the Jarvis.

[00:15:05] Speaker 05:
Why do we have to worry?

[00:15:07] Speaker 05:
I mean, the government's argument is that if you fail to prevail,

[00:15:12] Speaker 05:
in the first one, then the presumption of correctness still applies to what custom says.

[00:15:16] Speaker 05:
And they don't think they have any Jarvis Clarke obligation.

[00:15:19] Speaker 04:
Well, I think the court has a Jarvis Clarke obligation.

[00:15:21] Speaker 05:
Well, they don't think the court does.

[00:15:24] Speaker 05:
And the CIT doesn't think it does, because there are a series of cases at CIT where they've ruled against the importer at the front end.

[00:15:31] Speaker 05:
And I've said, that's it.

[00:15:34] Speaker 05:
We now put the government, we allow the customs choice to prevail.

[00:15:39] Speaker 04:
Again, I think if the court doesn't agree on first sale.

[00:15:43] Speaker 04:
Right.

[00:15:43] Speaker 05:
I'm sure the matter is there's not a precedential opinion that answers the question of what happens when you get down there and you fail to prevail.

[00:15:54] Speaker 04:
Right.

[00:15:54] Speaker 04:
But it's conceivably possible what's happened in the VWP in America case.

[00:15:58] Speaker 05:
And if we decide in this case that the valuation decision is wrong,

[00:16:05] Speaker 05:
Then for us to say anything about Jarvis Clark would be pure dicta.

[00:16:08] Speaker 04:
Oh, no.

[00:16:09] Speaker 04:
That would be live again in the lower court, Your Honor.

[00:16:10] Speaker 05:
Well, that's right.

[00:16:11] Speaker 05:
OK.

[00:16:12] Speaker 05:
So I mean, your whole Jarvis Clark argument you were just winding up to make, you save and make that, right, if you lose on the remand.

[00:16:21] Speaker 05:
Yes.

[00:16:22] Speaker 01:
I'd really like to move you to the shells argument, because I really do have questions about whether or not shells are susceptible of trade.

[00:16:32] Speaker 01:
You started answering my question talking about how the government has conceded there's a substantial transformation, but that's not the question, right?

[00:16:41] Speaker 01:
The question is, is there a substantial transformation, but whether or not these are susceptible of trade, something a person might well wish to buy?

[00:16:50] Speaker 01:
Isn't that it?

[00:16:51] Speaker 04:
The susceptible of trade question goes to whether the substantially transformed shell

[00:16:56] Speaker 04:
can be treated as an intermediate beneficiary country product.

[00:17:00] Speaker 04:
In order for that to happen, it has to be susceptible of trade.

[00:17:04] Speaker 04:
Now, the lower court said, well, there wasn't a commercially viable market for these things.

[00:17:09] Speaker 04:
But that's not the test.

[00:17:10] Speaker 04:
The test is susceptible of trade.

[00:17:13] Speaker 04:
And the record shows that Meijer did sell these things to subsidiaries in Italy and Thailand.

[00:17:19] Speaker 01:
Just as in the Torrance case.

[00:17:21] Speaker 01:
But even if the lower court rejected that saying something like, those are not arm's length transactions because they're subsidiaries.

[00:17:27] Speaker 01:
It's just the shell game moving, pun intended, moving money from one of your companies to another one of your companies, that still doesn't answer the question of whether these are, in fact, susceptible to trade.

[00:17:40] Speaker 01:
It doesn't reject your position

[00:17:44] Speaker 01:
Even if we conclude, for example, that this sales were de minimis, that just goes to how many were sold, not whether they are susceptible to trade.

[00:17:54] Speaker 04:
Well, I think the fact that they were actually traded demonstrates they're susceptible to trade.

[00:17:58] Speaker 05:
This goes to the GSP issue.

[00:18:00] Speaker 04:
Yeah, this is on the GSP.

[00:18:00] Speaker 05:
This doesn't have anything to do with evaluation.

[00:18:02] Speaker 05:
Right.

[00:18:03] Speaker 05:
OK, so that's the- This is just the GSP issue.

[00:18:06] Speaker 05:
Just in GSP.

[00:18:07] Speaker 05:
And you've agreed that if we agree that with the fact finding that there wasn't a second transformation, we don't reach this issue.

[00:18:14] Speaker 05:
I would think so.

[00:18:17] Speaker 04:
I've exceeded my time.

[00:18:18] Speaker 04:
I apologize.

[00:18:20] Speaker 05:
Thank you.

[00:18:21] Speaker 05:
All right.

[00:18:21] Speaker 05:
Thank you for being forthright.

[00:18:26] Speaker 02:
Ms.

[00:18:26] Speaker 01:
Farrell, please proceed.

[00:18:28] Speaker 02:
Good morning, Your Honors.

[00:18:29] Speaker 02:
May it please the court, with respect to the shell issue,

[00:18:34] Speaker 02:
The government did concede that there was a single substantial transformation.

[00:18:40] Speaker 03:
However... From the steel into the shell.

[00:18:42] Speaker 02:
Right.

[00:18:42] Speaker 02:
There's a disc.

[00:18:44] Speaker 02:
It starts out as a long tube and it gets cut.

[00:18:47] Speaker 02:
If it had been cut in Thailand and then punched, we would have had a double substantial transformation.

[00:18:51] Speaker 02:
But the cutting occurred in China.

[00:18:53] Speaker 02:
The disc goes to Thailand.

[00:18:55] Speaker 02:
In Thailand, it's put on a machine and punched.

[00:18:58] Speaker 02:
If it's shallow, it's a pin.

[00:19:00] Speaker 02:
If it's deep, it's a pot.

[00:19:02] Speaker 02:
And from there, going forward, it's processed, processed, processed.

[00:19:07] Speaker 02:
The court saw a video.

[00:19:09] Speaker 02:
It heard testimony.

[00:19:10] Speaker 02:
It saw, I think it might have been 17, 18 iterations of what either a pan or a pot goes through in Thailand.

[00:19:19] Speaker 02:
The issue that came up during trial, which there was not a single document supporting this, but a witness said, oh, on occasion,

[00:19:29] Speaker 02:
We may sell these.

[00:19:30] Speaker 02:
Now, to the extent it was the Thai witness that said, we sell the interim sixth stage.

[00:19:37] Speaker 02:
It's the sixth stage where they put a shelf.

[00:19:40] Speaker 01:
They're just the shelves, right?

[00:19:41] Speaker 01:
We're just talking about the shelves.

[00:19:43] Speaker 01:
Just the shelves, yes.

[00:19:44] Speaker 01:
They had a witness that said, we sell the shelves.

[00:19:46] Speaker 02:
And they said, two sister companies.

[00:19:50] Speaker 02:
And they said, we just started doing that.

[00:19:53] Speaker 02:
There's nothing in the record of a purchase order for this.

[00:19:57] Speaker 02:
And I mean, this is part of- But that's my problem.

[00:20:00] Speaker 01:
My concern about this is I feel like the trade court addressed it not as whether this is susceptible to being traded, but whether it was actually being sold and being sold to non-sister companies.

[00:20:14] Speaker 01:
And that, to me, doesn't feel consistent with the requirement by law that it only be susceptible to trade.

[00:20:19] Speaker 01:
I mean, you have to agree, something could be susceptible to trade, though never actually sold, right?

[00:20:24] Speaker 02:
Well, I mean, anything could be susceptible to trade.

[00:20:27] Speaker 02:
But these were not susceptible to trade, because if we believe the testimony of the witnesses, which is, we don't start manufacturing these until we have an order.

[00:20:38] Speaker 02:
Well, where's the order for the stage at six?

[00:20:40] Speaker 01:
But Torrington expressly says something is susceptible to trade if a person might wish to buy it, not if a person is buying it, not if there's evidence it has been sold, if a person might wish to buy it.

[00:20:54] Speaker 01:
My concern is I think that the trade court may have read the law wrong on this part.

[00:21:00] Speaker 01:
I have no idea whether they've created a record that overcomes the question.

[00:21:06] Speaker 01:
I'm just concerned that I think the trade court may have construed this tiny portion, I know it's a really small portion of the case, but this tiny portion of the case too narrowly

[00:21:15] Speaker 01:
by being inconsistent with Torrington and focusing too much on what was sold and whether what was sold was de minimis or not.

[00:21:22] Speaker 01:
And I don't think that's the test.

[00:21:24] Speaker 01:
I don't know what susceptible to being sold means exactly, but I know it doesn't require actual sales.

[00:21:31] Speaker 02:
Well, susceptible to trade, presumably there would be people desiring to purchase that if you were susceptible to trade.

[00:21:38] Speaker 02:
I agree.

[00:21:39] Speaker 02:
And what you had was.

[00:21:41] Speaker 05:
Depends on how far forward looking susceptible is.

[00:21:46] Speaker 02:
Right.

[00:21:46] Speaker 02:
Right, Your Honor.

[00:21:47] Speaker 05:
And if we were to decide in this case that there wasn't a second transformation, this issue would moot.

[00:21:53] Speaker 05:
But since you both are professionals in this field, you will know how to advise the Court of National Trade when the issue comes up again.

[00:22:00] Speaker 02:
Well, Your Honor, government believes that the issue won't come up again.

[00:22:03] Speaker 02:
I'm confused.

[00:22:03] Speaker 03:
At least not in this case.

[00:22:05] Speaker 03:
Even if the shells were susceptible to trade,

[00:22:10] Speaker 03:
How does that affect the fact that the additional steps were not a second transformation?

[00:22:17] Speaker 02:
Right, Your Honor.

[00:22:18] Speaker 03:
You said it doesn't.

[00:22:23] Speaker 03:
I mean, it's a disconnect.

[00:22:24] Speaker 03:
I thought you all agreed that there was a transformation into the shell.

[00:22:31] Speaker 03:
Right.

[00:22:31] Speaker 03:
But there has to be another transformation, which is different than whether that was susceptible to trade.

[00:22:39] Speaker 03:
the polishing and adding a handle is a transformation.

[00:22:44] Speaker 02:
And that's a pure, substantial evidentiary issue.

[00:22:48] Speaker 02:
And the trial court looked at it and came to the conclusion that based on the facts, it's all right before, it's all weak.

[00:22:53] Speaker 03:
I don't understand why this is susceptible to trade issue, even if the district, even if the trial court made an error in determining that.

[00:23:03] Speaker 03:
There still has to be a second transformation.

[00:23:05] Speaker 02:
I agree, Your Honor, and I think that the fact that something could be sold while it's in co-8, it's an in-co-8 finished, this is a finished, unfinished, the shells are unfinished pots and pans.

[00:23:19] Speaker 02:
And they go through a bunch of steps, and they're all in co-8 until they become the final product.

[00:23:25] Speaker 02:
The fact that you could sell that is not a substantial transformation.

[00:23:30] Speaker 02:
Because what you're selling is an unfinished pot or pan.

[00:23:34] Speaker 02:
So you're always an unfinished pot or pan until you're finished and sold to the customer.

[00:23:38] Speaker 05:
Now, we've spent a third of your argument time talking about an issue that in all likelihood is mooted out.

[00:23:43] Speaker 05:
Are you going to talk about the elephant in the room, or what?

[00:23:45] Speaker 02:
Well, Your Honor, this court, Nishihara.

[00:23:48] Speaker 03:
Did you all make this argument to the CIT, or did he come up with this on his own?

[00:23:53] Speaker 02:
The CIT raised this as a concept.

[00:23:56] Speaker 03:
Because you've never made this argument before, have you?

[00:23:58] Speaker 03:
I'm not aware of it, but it came up in an earlier... There's a long history of non-market economy and your office works with the DC office that does the anti-dumping stuff.

[00:24:13] Speaker 03:
This seems a big extension.

[00:24:15] Speaker 02:
Well, Your Honor, it's interesting because it does say that

[00:24:19] Speaker 02:
Nishihawa, when you talk about farm land.

[00:24:22] Speaker 03:
Let me back up.

[00:24:23] Speaker 03:
Yes.

[00:24:23] Speaker 03:
If we determine, how can we read Nishio, I can't say it right either, that case to create this new requirement that's not in the statute?

[00:24:37] Speaker 03:
That can't be a correct interpretation of that case, can it?

[00:24:41] Speaker 02:
Well, Your Honor, interestingly enough, it was the case that made the statute come.

[00:24:45] Speaker 02:
It's a court observation that,

[00:24:49] Speaker 02:
Your first sale can actually be a sale if it's for transport to the US, export to the US.

[00:24:55] Speaker 03:
But we have to look at the statute.

[00:24:58] Speaker 02:
Understood, but the fact that

[00:25:02] Speaker 02:
You need to understand whether or not the statute turns on price.

[00:25:07] Speaker 03:
Let me ask you this.

[00:25:08] Speaker 03:
Even if non-market influences can be read to affect trade practices of different countries, which seems to be a stretch to me,

[00:25:21] Speaker 03:
How would it be confined only to non-market economies?

[00:25:24] Speaker 03:
I mean, because clearly market economies also have unfair trade practices.

[00:25:29] Speaker 03:
You all get anti-dumping and countervailing duty, maybe not countervailing duties orders, but you get anti-dumping orders against market economies all the time.

[00:25:37] Speaker 03:
So wouldn't your interpretation of this statute now require in every single case where they're trying to argue for a first sale to look into the underlying economic practices

[00:25:50] Speaker 03:
some country in the chain.

[00:25:52] Speaker 02:
Yes, Your Honor, because it affects the price.

[00:25:55] Speaker 02:
And the problem is that when we're looking at cost plus profit, the profit can be squeezed

[00:26:04] Speaker 02:
to a very small amount if I'm being assisted by being in a non-market economy.

[00:26:09] Speaker 03:
But that same price differential would be there whether or not it's an arms link transaction or not.

[00:26:19] Speaker 03:
If you are producing in a country that subsidizes the price, then

[00:26:25] Speaker 03:
You can sell to a related company at a certain price.

[00:26:28] Speaker 03:
You can sell to a market competitor at a certain price.

[00:26:30] Speaker 03:
That's going to be built in.

[00:26:31] Speaker 03:
It's not going to change for this arm's length analysis.

[00:26:35] Speaker 03:
I get that you're valiantly trying to defend it.

[00:26:37] Speaker 03:
I assume you get that you're also not, doesn't seem like you're going to prevail on this.

[00:26:42] Speaker 03:
It's an interesting concept, but isn't that the whole point of anti-dumping and countervailing duty?

[00:26:47] Speaker 03:
statutes is to get at underlying unfair trade practices.

[00:26:51] Speaker 03:
We don't get it through customs law.

[00:26:53] Speaker 02:
Understood, Your Honor, that non-market economy and anti-dumping and countervailing is a trade remedy.

[00:27:01] Speaker 02:
But here, there is a potential effect on a price if you're in a non-market economy.

[00:27:07] Speaker 02:
And so that is what we're needing.

[00:27:09] Speaker 03:
There's a potential effect on price in market economies, too, if they subsidize it.

[00:27:13] Speaker 02:
Understood.

[00:27:14] Speaker 02:
If they subsidize it, then that may

[00:27:17] Speaker 02:
be a fact to be considered.

[00:27:19] Speaker 03:
But I think you're opening up a can of worms here that, frankly, even customs doesn't want opened up because it would dramatically change these evaluation trials at the CIT and get into

[00:27:35] Speaker 03:
a mini trial on anti-dumping duties and things like that.

[00:27:40] Speaker 03:
Sure, it's interesting, I guess.

[00:27:44] Speaker 03:
It doesn't seem to me to be a correct reading of the statute or the case.

[00:27:49] Speaker 02:
Well, ultimately, Your Honor, this court knows what it meant in Nishihara when it said, in the absence of any.

[00:27:54] Speaker 05:
Can we go back to the etiology?

[00:27:56] Speaker 05:
I mean, you argued that.

[00:27:59] Speaker 05:
first iteration of this case in front of Judge Musgrave?

[00:28:02] Speaker 02:
Yes, Your Honor.

[00:28:03] Speaker 05:
And did you propose to Judge Musgrave that we hive on to the value of the non-market economy?

[00:28:09] Speaker 02:
No, Your Honor.

[00:28:10] Speaker 05:
At that point, it was his idea, not yours.

[00:28:13] Speaker 02:
That showed up as a thing.

[00:28:15] Speaker 02:
I just wanted a yes or no.

[00:28:16] Speaker 02:
Yes, Your Honor.

[00:28:16] Speaker 02:
It arrived as part of the partial motion.

[00:28:18] Speaker 05:
So let's back up.

[00:28:19] Speaker 05:
Has the government before this case ever argued that NISO stands for the proposition that there's an independent non-market influence test?

[00:28:29] Speaker 02:
Your Honor, I'm not aware of any argument to that effect.

[00:28:33] Speaker 05:
OK, I went back to NISO.

[00:28:34] Speaker 05:
And I believe in it.

[00:28:35] Speaker 05:
I had to get the breach from the National Archives.

[00:28:37] Speaker 05:
The argument was not made by the government in that case.

[00:28:41] Speaker 05:
And so the argument all along here has been, from the other side, has been that language, in Judge Larry's opinion, for the court in that case about non-market influences, is a way to describe whether or not there have been things happening that means it's not an honest arms-link transaction.

[00:28:57] Speaker 02:
And I think it was consistent with the language.

[00:29:00] Speaker 02:
The language was broad.

[00:29:00] Speaker 05:
And if you look at the regulations, and you look at customs, and then after NISO, customs put out 96, 87, or whatever, then there's not a hint of some independent test looking at no market effects.

[00:29:13] Speaker 02:
And Your Honor, that language that was in Nisiyawo speaking in terms of, it was a comma.

[00:29:19] Speaker 00:
Arms length.

[00:29:19] Speaker 02:
And yeah, it was, it says, at arms length, and then in the, and then comma, in the absence of any.

[00:29:26] Speaker 02:
So the comma there could suggest that maybe there was something more.

[00:29:30] Speaker 02:
I think it was an interesting read and a fair read.

[00:29:34] Speaker 02:
But I mean, if this court, obviously, this court knows its own.

[00:29:38] Speaker 05:
So the government's not going to come to an end if we were to hold that there's not a separate independent non-market effect, that that's part of what our blank is all about.

[00:29:48] Speaker 05:
And thank you.

[00:29:49] Speaker 05:
Let's leave the non-market economy issues to the countervailing duty and anti-dumping statutes.

[00:29:54] Speaker 02:
And if this court rules that way, this action still, the court should still be affirmed, because at trial, Meyer had an obligation to provide sufficient documentation.

[00:30:06] Speaker 03:
OK, let's assume I understand that separate argument.

[00:30:11] Speaker 03:
It's hard to read the trial court opinion and separate out these two prongs as independent holdings.

[00:30:17] Speaker 03:
So let's assume we don't agree with you that we can affirm.

[00:30:21] Speaker 03:
Can you answer the questions I asked Mr. Peterson?

[00:30:23] Speaker 03:
What do you think this would look like on remand?

[00:30:25] Speaker 03:
Is it a new trial, or is it just a reconsideration of the evidence already deduced to trial under the proper standard?

[00:30:33] Speaker 02:
Your Honor, I think if it were remanded, it would not be for a new trial, because no one should get a second bite at the apple when they refuse to bring documents in, which was acknowledged in the record of the case.

[00:30:45] Speaker 02:
But more importantly, the trial court can go back with guidance from this court, if this court chooses to remand, and go through the citations that it's made to the record.

[00:30:54] Speaker 01:
The observation that- Isn't there a third option?

[00:30:57] Speaker 01:
I mean, can't we vacate, remand, and let the trial court decide on its own whether it needs a new trial under the circumstances?

[00:31:04] Speaker 02:
Well, Your Honor, that's another option.

[00:31:07] Speaker 02:
I mean, the trial court always has the right to handle its docket as it sees fit.

[00:31:13] Speaker 05:
Well, you have a possibility of it being assigned to another judge.

[00:31:15] Speaker 05:
It's been handed off between two senior judges already, right?

[00:31:20] Speaker 02:
Well, it was still from one senior judge to another.

[00:31:22] Speaker 05:
And Judge Accolino said, this non-market economy stuff, I don't think that's right.

[00:31:31] Speaker 05:
pretty clear that the trial was one of listening and then asking for proposed findings of fact and conclusions of law from the two sides, printing both up and then flipping a coin, right?

[00:31:44] Speaker 02:
Well, I would argue it wasn't flipping a coin.

[00:31:47] Speaker 02:
It was to review both sets of facts

[00:31:50] Speaker 02:
And the court concluded that the government's set of facts more fairly depicted what had occurred at trial.

[00:31:56] Speaker 02:
And so it adopted our facts.

[00:31:58] Speaker 02:
And so I don't think.

[00:32:00] Speaker 01:
But unfortunately, you decided to put whether or not this was an arm's length transaction in your conclusions of law, not your facts.

[00:32:05] Speaker 01:
That was me, but that's what you did.

[00:32:09] Speaker 01:
So OK, can I ask a slightly different question?

[00:32:11] Speaker 01:
This is the Jarvis question.

[00:32:12] Speaker 01:
I don't have a lot of time left.

[00:32:14] Speaker 01:
And it seems unlikely, based on this panel, that we have to answer this question.

[00:32:18] Speaker 01:
But I was trying to reconcile this 1984 Jarvis decision with the presumption that you give custom for correctness.

[00:32:27] Speaker 01:
And the only thing I could come up with that made it such that that opinion is not a direct affront to the statute mentally,

[00:32:35] Speaker 01:
was that the opinion was really focused on a dual burden of proof.

[00:32:39] Speaker 01:
And I want to hear your thoughts on whether or not that opinion was meant to do away with the dual burden of proof and only say that the presumption of correctness means the person has to prove custom's position is incorrect.

[00:32:53] Speaker 01:
They don't necessarily have to prove their position is correct.

[00:32:58] Speaker 01:
And what I mean by that is here,

[00:32:59] Speaker 01:
There seem like a lot of different options that could end up being the right one.

[00:33:04] Speaker 01:
And maybe you meet your burden of proof, and you're consistent with the statute, and Jarvis means you just prove customs got it wrong.

[00:33:12] Speaker 01:
And then the decision maker is free to adopt what they think the correct outcome is, which might not be your proposed alternative.

[00:33:21] Speaker 01:
We see lots of cases where somebody argues one thing, somebody argues something else.

[00:33:25] Speaker 01:
The answer actually isn't exactly either of those things, but a third option.

[00:33:29] Speaker 01:
Would it be fair to read Jarvis as sort of meaning to adopt that?

[00:33:33] Speaker 01:
That would seem to be consistent with the statute.

[00:33:36] Speaker 02:
Your Honor, I think that is consistent with the statute, and I think it's a fair reading of Jarvis Clark.

[00:33:40] Speaker 02:
I think Jarvis Clark has been used as a shield and a sword by many people that when there's a problem, they say, oh, Jarvis Clark, trial court should have figured this out.

[00:33:49] Speaker 02:
Well, what you had here was a situation where the second sale, the appraisal into the United States, was never in play.

[00:33:57] Speaker 02:
So how would the trial court even get to that issue when it's not raised?

[00:34:01] Speaker 02:
And if you thought the trial court was wrong, why not raise it on a motion for reconsideration of, oh, hey, by the way, if you thought there were distortions.

[00:34:08] Speaker 05:
When you say it was not raised, it was raised by customs as being the correct valuation, with a whole analytic construct in customs producing all sorts of paper to come to that conclusion.

[00:34:20] Speaker 02:
Well, in this case, this would have been, at the time of importation under the Mott Act,

[00:34:26] Speaker 02:
Plaintiff had an obligation to put down the right valuation on his entry papers, and customs accepted that valuation.

[00:34:33] Speaker 02:
So you have a party admission as to what the valuation is, and customs not disputing it.

[00:34:39] Speaker 02:
So why would the trial court go there?

[00:34:41] Speaker 02:
There's no need to.

[00:34:43] Speaker 02:
because it was never raised.

[00:34:45] Speaker 02:
But I agree, Your Honor, that Jarvis Clark can't be used as a shield and a sword and a cudgel to fire his remorse.

[00:34:53] Speaker 02:
And it can't be read directly contrary with the statute.

[00:34:55] Speaker 02:
And it can't be read directly contrary to the statute either.

[00:34:58] Speaker 02:
And I agree.

[00:34:59] Speaker 02:
It's a burden, Sharon.

[00:35:00] Speaker 02:
It was about don't take a kneejerk.

[00:35:04] Speaker 02:
Oh, the plaintiffs didn't make their case.

[00:35:06] Speaker 02:
Automatically, I have to accept.

[00:35:08] Speaker 01:
Constance is right.

[00:35:09] Speaker 01:
Thank you, Ms.

[00:35:09] Speaker 02:
Farrell.

[00:35:10] Speaker 01:
Mr. Peterson?

[00:35:11] Speaker 01:
Thank you.

[00:35:11] Speaker 01:
She went over by about two minutes, so we'll give you two extra minutes if you need them.

[00:35:18] Speaker 04:
Thank you, Your Honor.

[00:35:19] Speaker 04:
Briefly, to go to the question that you asked, Chief Judge, you don't necessarily have to remand with instructions for a new trial.

[00:35:26] Speaker 04:
You can remand for further proceedings consistent with your opinion under 28 USC 2643B.

[00:35:34] Speaker 04:
The Court of International Trade has the power to decide what those proceedings ought to be.

[00:35:39] Speaker 04:
A second point addressed to what Judge Yu said.

[00:35:43] Speaker 04:
She just notes for the record that there was never at any of the times in question any dumping or countervailing duty order in place regarding Myers merchandise.

[00:35:52] Speaker 04:
And as you know, we don't rev up the dumping or countervailing duty laws or their concepts unless there is a complaint

[00:36:00] Speaker 04:
an unfair practice and it's harming an industry in the United States.

[00:36:04] Speaker 04:
So there would be no reason to do that here.

[00:36:07] Speaker 04:
Now, as to what a remand might look like in terms of Jarvis Clarke, if the court found that the first sales were unacceptable, it would still have to proceed to look at the second sales.

[00:36:20] Speaker 04:
They're very much in play.

[00:36:21] Speaker 04:
They were the basis of the present.

[00:36:23] Speaker 05:
It depends on what they said.

[00:36:23] Speaker 05:
There are some judges on that court who believe that if

[00:36:27] Speaker 05:
They decided that you lose, that your attempt to get the first sale is incorrect.

[00:36:34] Speaker 05:
There's some judges that don't go on.

[00:36:37] Speaker 04:
Well, I think under Charles Clark, they have to look at the second sale.

[00:36:40] Speaker 04:
Well, I know.

[00:36:41] Speaker 05:
But I've done some extensive research in the body of CIT law on this very issue.

[00:36:47] Speaker 05:
And sometimes they go on and address the second valuation.

[00:36:51] Speaker 05:
Sometimes they don't.

[00:36:52] Speaker 04:
Yeah, well, I think in this case, they would have to.

[00:36:55] Speaker 05:
Well, I mean, I think our remand would say that the CIT is expected to perform its duties under Jarvis Clark.

[00:37:05] Speaker 05:
That's that would be performs its duties and if it decides on the remand that you're wrong And you don't get first evaluation and it goes like this to Charles Clark and says we will have anything else to do It'll come up here on appeal if you want to know your suggestion on remand is perfectly acceptable And we would deal with what they do when they do it Okay, thank you.

[00:37:27] Speaker 01:
Mr. Peterson.

[00:37:28] Speaker 01:
I think both counsel this case is taken under submission and