[00:00:00] Speaker 01: Our next case for argument is 22-2078, United States Steel Corporation versus the United States. [00:00:08] Speaker 01: Ms. [00:00:08] Speaker 01: Schulman, please proceed. [00:00:11] Speaker 00: Thank you. [00:00:12] Speaker 00: And may it please the court? [00:00:14] Speaker 00: My name is Sarah Schulman on behalf of United States Steel Corporation. [00:00:18] Speaker 00: And today, I would like to make very clear that based on the underlying record, the US importer should have been charged a delivered duty paid price. [00:00:29] Speaker 00: By lowering the price for anti-dumping duties, the foreign producer assumed the expense of those duties. [00:00:39] Speaker 00: And that matters under the law. [00:00:42] Speaker 00: The regulation asks, did the producer reimburse the importer, even an affiliated importer? [00:00:49] Speaker 00: And that is the transaction at issue under the reimbursement regulation, producer and or exporter and importer. [00:00:59] Speaker 00: And that makes sense, given the rationale behind the reimbursement regulation. [00:01:04] Speaker 00: As this court recognized in APEX exports, the rationale behind the reimbursement regulation is to discourage exporters or producers from assuming these. [00:01:14] Speaker 01: But what is your evidence that there was, in fact, a reimbursement? [00:01:18] Speaker 01: Because there's nothing in the supply agreement that suggests the transfer price between AIS and BSA. [00:01:26] Speaker 01: and the agreement only sets forth the formula price between BSA and Steelscape, I don't see how that doesn't undermine your argument. [00:01:33] Speaker 01: I'm wondering, where is your evidence of a reimbursement? [00:01:37] Speaker 00: So our evidence of reimbursement is based on actually the terms of sale for this transaction, which were delivered, duty paid, which I believe you can see in the supply agreement. [00:01:52] Speaker 00: under Article 5.2 at Confidential Appendix 2078. [00:01:59] Speaker 00: But notwithstanding the supply agreement, you can also see that the company itself reported to Commerce the terms of sale to its US import. [00:02:13] Speaker 01: And where on 2078 is the language that you'd like me to look at? [00:02:18] Speaker 00: It's under Article 5.2 and [00:02:21] Speaker 00: Given that this is a confidential document, I don't know how much more I can say in open court. [00:02:29] Speaker 04: Well, can you give us 5.1 or 5.2? [00:02:34] Speaker 03: 5.2 says shipping. [00:02:39] Speaker 04: You mean shipping? [00:02:41] Speaker 00: Yes. [00:02:42] Speaker 00: Because the terms of sale which deliver duty paid is, [00:02:46] Speaker 00: assigns various responsibilities in a transaction. [00:02:51] Speaker 00: Do you have that document with you? [00:02:52] Speaker 01: I think you need to look at it, because I really don't think you want us looking at 5.2. [00:02:56] Speaker 01: And I don't want you to walk out of here later and be like, oh my god, I want 4.2. [00:03:01] Speaker 01: So I want you to make sure you get to put your argument on the record. [00:03:05] Speaker 01: So do you have it? [00:03:07] Speaker 00: I can get it, but I can also point you to a different place on the underlying record. [00:03:11] Speaker 01: But if you think that place is important, don't you want me to know where it is? [00:03:16] Speaker 01: Yes. [00:03:20] Speaker 01: OK, how long is it going to take? [00:03:22] Speaker 01: Carrie, just take mine. [00:03:23] Speaker 00: So sorry. [00:03:24] Speaker 01: There you go. [00:03:26] Speaker 01: Just tell me. [00:03:27] Speaker 01: Make sure it's 5.2, because that's what I just circled. [00:03:29] Speaker 01: I don't think it is. [00:03:29] Speaker 01: I don't think 5.2 is what you mean. [00:03:39] Speaker 02: Yes. [00:03:41] Speaker 01: OK, no, no, you've got to go back over there. [00:03:45] Speaker 00: Just to clarify, delivered duty paid is often abbreviated as DDP. [00:03:51] Speaker 00: And when a sale is based on a delivered duty paid basis, that has various ramifications for that transaction, separate and apart from the actual price of the good. [00:04:05] Speaker 00: It assigns responsibility for things like freight and insurance, but specifically here [00:04:11] Speaker 00: It tells us that the invoice price should include an amount for anti-dumping duties. [00:04:18] Speaker 03: But I'm still a little confused. [00:04:22] Speaker 03: All that says to me is that it was delivered duty paid. [00:04:26] Speaker 03: So let me just back up. [00:04:29] Speaker 03: Maybe I misunderstand what the transaction here was. [00:04:32] Speaker 03: But I thought that there was an agreement between Steelscape and [00:04:40] Speaker 03: BSA that the price would, that Steelscape would pay BSA would be the price of whatever plus the duties. [00:04:49] Speaker 03: Is that right? [00:04:51] Speaker 00: That is partially correct. [00:04:53] Speaker 00: Steelscape, which is the US importer's customer, is a party to this agreement. [00:04:58] Speaker 00: However, it is our position that this [00:05:00] Speaker 03: Wait, so what's wrong with that? [00:05:02] Speaker 03: You said it's partially correct. [00:05:04] Speaker 03: So Steelscape, the ultimate customer in this case of the importer, was paying a price that was for better or, you know, I don't want to get into the details if I'm being inaccurate, but basically the price plus the anti-dumping duties. [00:05:21] Speaker 00: That is what the record shows. [00:05:23] Speaker 03: That's what they gave to BSA. [00:05:24] Speaker 03: And then BSA turned around and subtracted [00:05:29] Speaker 03: the amount attributable to the anti-dumping duties and said the entry price is the price minus the anti-dumping duties. [00:05:38] Speaker 03: And so that's what they entered it at. [00:05:40] Speaker 03: They're the importer. [00:05:41] Speaker 03: They're the ones doing the entering. [00:05:42] Speaker 03: And then they paid to customs the amount of the anti-dumping duties. [00:05:47] Speaker 03: Is that all accurate? [00:05:48] Speaker 00: That is all accurate. [00:05:51] Speaker 03: I'll let you go on, but I want to understand where we are here. [00:05:55] Speaker 03: So that is the importer entering at a price that doesn't include anti-dumping duties. [00:06:01] Speaker 03: And it is paying anti-dumping duties to customs that it received from a US customer. [00:06:11] Speaker 03: How does that reflect the exporter reimbursing the importer for anti-dumping duties? [00:06:18] Speaker 00: It absolutely doesn't. [00:06:20] Speaker 00: And that is our point, because it is not the entered value or even the price to the US importer's customer that reflects reimbursement. [00:06:30] Speaker 00: It is rather the price invoice to the US importer, because this is not a situation where the producer or exporter is acting as the US importer. [00:06:41] Speaker 00: That does happen, but here the US importer, while an affiliate, is a distinct entity. [00:06:47] Speaker 00: So there was a transaction there. [00:06:50] Speaker 03: So where does the record show that the price invoiced by AIS to BSA? [00:06:58] Speaker 00: So we can see on the record where BlueScope reports the terms of sale for that transaction. [00:07:05] Speaker 03: Is it just that it was delivered, duty paid? [00:07:08] Speaker 00: Yes, and delivered duty paid means that the invoice price should include an amount for anti-dumping duties. [00:07:15] Speaker 03: I mean, if that's all there were, you might have a better argument. [00:07:18] Speaker 03: But when you have the details of the financial transactions between the importer and its customer, and it shows that the US side paid the anti-dumping duties, and there is no indication that either the importer or the customer got reimbursed from the exporter, you have a problem, don't you? [00:07:37] Speaker 00: Well, the regulation doesn't ask what the US importer's price to its customer was. [00:07:44] Speaker 00: It also doesn't ask what the US importer declares to customs. [00:07:48] Speaker 00: It asks, did the exporter assume the cost of the duties? [00:07:52] Speaker 01: But you want the USA to pay the cost of duties twice, once to customs and once to AIS. [00:07:57] Speaker 00: Frankly, Your Honor, it's the company's prerogative to structure its sale however it wants. [00:08:02] Speaker 00: And here, there was a sale between a producer and a US importer. [00:08:07] Speaker 00: And they chose to structure that sale on a delivered duty paid basis. [00:08:12] Speaker 00: If they did not want the US importer to be invoiced a price that includes an amount for anti-dumping duties, it should not have been the terms of sale. [00:08:22] Speaker 00: But we know that it is. [00:08:24] Speaker 00: And I would point your honors to the appendix at 3156, to the end of the response on that page, as well as the first paragraph of the next page, appendix 3157, to see how the company [00:08:37] Speaker 00: reports its terms of sale to its importer, Blue Scope Steel Americas or BSA. [00:08:44] Speaker 03: I'm just still confused, though, because given the way the transaction worked between Steelscape and BSA, the anti-dumping duties seem to have come from the importer side. [00:09:01] Speaker 00: the reimbursement regulation is meant to discourage the exporter from assuming the duties. [00:09:07] Speaker 00: And so I like to think of it in that context. [00:09:09] Speaker 03: Well, yeah, absolutely. [00:09:10] Speaker 03: But if there was any indication that the exporter had given an amount of money to BSA, besides saying that this is duty paid, that may just be an inaccurate description. [00:09:22] Speaker 03: It may emit other kinds of duties and not anti-dumping duties. [00:09:26] Speaker 00: Well, hypothetically, Your Honor, if the transaction between [00:09:31] Speaker 03: Sorry, I'm interrupting again, but I want to know, is there anything on the record that actually shows what the actual invoice price between AIS and BSA is? [00:09:42] Speaker 03: I don't know if this hypothetical works. [00:09:44] Speaker 03: And I always hate to use hypotheticals in dumping cases, because it's so complex, and economics are so complex, and I always mess them up. [00:09:51] Speaker 03: So if it doesn't work, just tell me. [00:09:53] Speaker 03: But let's say that Steelscape agreed to pay BSA [00:09:59] Speaker 03: $80 and that 5% of that's attributable to anti-dumping duties and 75% is the rest and so BSA enters the goods at $75 Assesses the $5 anti-dumping duties and gives that to customs so the $5 is the anti-dumping duties Is there any and if that's accurate or [00:10:24] Speaker 03: In this case, it seems like that's what happened. [00:10:28] Speaker 03: If we thought that AIS was reimbursing BSA for that $5, where would we see that in this record? [00:10:40] Speaker 00: So I would like to answer your honor's time. [00:10:42] Speaker 00: I realize that I've gone over my allocated time. [00:10:45] Speaker 00: We would see that in the record with regard to the transaction between the exporter or producer in this situation [00:10:54] Speaker 00: and the US importer hypothetically, to follow your lead, if the foreign producer charged its importer a delivered duty price. [00:11:07] Speaker 00: And so that invoice would include the amount of the duties, but then wrote it a check for those anti-dumping duties. [00:11:16] Speaker 00: How would what the US importer's customer pay negate that check? [00:11:23] Speaker 00: It wouldn't. [00:11:23] Speaker 00: The exporter would still be out that money. [00:11:25] Speaker 03: But we don't have any record of the foreign producer or exporter writing that check. [00:11:33] Speaker 03: Unless you have something else, we have that really hard to understand shipping statement about delivered duties paid, which [00:11:43] Speaker 03: I think you're trying to say is injury history practice to include all duties. [00:11:47] Speaker 03: But given the facts of this case, maybe it didn't. [00:11:50] Speaker 03: I don't understand why you would read that general statement to override the specific facts here. [00:11:56] Speaker 00: Well, we know that deliver duty paid means that any amount of anti-dumping duties should be included in the invoice. [00:12:03] Speaker 00: And you can see that on the record in the customs ruling that we provided as the last addendum to our opening brief. [00:12:10] Speaker 03: But we don't actually have an invoice from the exporter to the importer showing a specific price that included anti-dumping duties. [00:12:18] Speaker 00: And that's exactly the problem because we know [00:12:21] Speaker 00: that this sale was structured as DEDP. [00:12:23] Speaker 00: That's what the company told us. [00:12:25] Speaker 00: That's what the record shows. [00:12:27] Speaker 00: But they didn't charge the US importer a delivered duty paid price. [00:12:31] Speaker 00: And that is exactly how the exporter assumed the cost of those duties. [00:12:35] Speaker 00: And that is the reimbursement. [00:12:39] Speaker 00: Unless there are any further questions, I would like to save the rest of my time for a bubble. [00:12:44] Speaker 01: Yes, that's great. [00:12:46] Speaker 01: Ms. [00:12:47] Speaker 00: Bond, please proceed. [00:12:57] Speaker 05: May I please the court? [00:12:59] Speaker 05: I'll start with where US Steel started, the DDP price. [00:13:04] Speaker 05: The core misunderstanding there is that the DDP price in 5.2 of the supply agreement is the price to Steelscape like the rest of the supply agreement. [00:13:17] Speaker 05: So the supply agreement establishes a regime for Steelscape to make purchase orders, and it establishes a formula price for Steelscape [00:13:27] Speaker 05: And in 5.2, it establishes that the price to Steelscape is a delivered duty paid price. [00:13:33] Speaker 05: So it covers the cost not only of the underlying steel merchandise, but also the cost of transporting the merchandise from Australia to the United States and including the clearance of customs and the payment of anti-dumping duties. [00:13:48] Speaker 05: That's all about just BSA to Steelscape. [00:13:50] Speaker 05: Exactly. [00:13:50] Speaker 05: And so all of that involving the payment that is to Steelscape is involved the payment of duties because that's where the duties are. [00:13:59] Speaker 01: Exactly. [00:13:59] Speaker 05: And it's precisely and it's no surprise that the sale to the US customer [00:14:05] Speaker 05: the sale by the importer to the U.S. [00:14:08] Speaker 05: customer would be that duty inclusive price. [00:14:11] Speaker 05: And that actually shows that the purpose of the reimbursement regulation is being satisfied here because the importer, Blue Scope Americas, paid the anti-dumping duties and it passed on those costs to its customer, Steelscape. [00:14:26] Speaker 01: Well, it makes me nervous when someone says the purpose of the regulation is being satisfied. [00:14:30] Speaker 01: Does that mean the letter of the regulation is not satisfied? [00:14:33] Speaker 05: Both are being satisfied. [00:14:34] Speaker 05: But I mention purpose only because with the complex fax it issue, it is helpful to understand that the underlying goal of the regulation is to, I won't speak about purpose any longer. [00:14:46] Speaker 05: But the question is, does substantial evidence support commerce's finding that no reimbursement occurred here? [00:14:55] Speaker 05: And the answer there is yes, because commerce explained, for example, at appendix page 4103 in the final analysis memorandum, that the formula price, that's the price that has been discussed, and that's the delivered duty paid price. [00:15:10] Speaker 05: That is to Steelscape. [00:15:11] Speaker 05: And because that is the whole crux of US Steel's argument, so the fact that there are components then taken out of that price to reach the entry price [00:15:22] Speaker 05: is no surprise and is perfectly normal. [00:15:24] Speaker 01: Thank you for bringing me back to the standard of review. [00:15:26] Speaker 01: So even if I thought that the words of the DDP moniker in 5.2 created some question about something that was something that would all be reviewed for substantial evidence, Commerce looked at it. [00:15:39] Speaker 01: They decided it. [00:15:41] Speaker 05: Exactly, Your Honor. [00:15:42] Speaker 05: And the supply agreement itself, as well as the invoices, provide that substantial evidence in support of Commerce's finding that the formula price in the supply agreement is to steelscape [00:15:52] Speaker 05: And it's resulting findings that Blue Scope America has paid the anti-dumping duties and passed those costs on to its customer. [00:16:00] Speaker 01: And was I correct that if we were to fine for the appellant, it would result in double duties, basically paid to customs and paid to AIS? [00:16:08] Speaker 01: That's right. [00:16:09] Speaker 05: And I apologize. [00:16:12] Speaker 05: At appendix page 2110, there's a breakdown of all the different component pieces [00:16:18] Speaker 05: in the formula price that is essentially reverse engineered to assess the entry value as well as the invoice price to Blue Scope Americas. [00:16:28] Speaker 05: And that demonstrates that each of the components is being paid. [00:16:32] Speaker 05: So not only does Blue Scope Americas pay the entry value, they pay the shipping cost. [00:16:38] Speaker 05: They pay the anti-dumping duties to the United States. [00:16:41] Speaker 05: And then there's an additional commission on top of that. [00:16:44] Speaker 05: And that added together results in the formula price too. [00:16:48] Speaker 01: I have a sort of side hustle type question for you. [00:16:52] Speaker 01: Why is this case here? [00:16:53] Speaker 01: And what I mean by that is most of these customs cases are about classification. [00:16:57] Speaker 01: And that matters, right, because there's going to be future imports. [00:17:00] Speaker 01: This seems like such a narrowly tailored case. [00:17:02] Speaker 01: I'm kind of surprised to see it on appeal. [00:17:04] Speaker 01: Is there just a huge amount of money impacted here by the concept of what would be the double payment if it were required? [00:17:12] Speaker 05: Well, there are other administrative reviews that follow that share the same issue, so it may have cascading. [00:17:19] Speaker 01: This contract and the way, even though this seems like an unusual set of facts, [00:17:24] Speaker 05: you're saying there are several other cases with similarly set facts such that this matters yes and there's one pending at the court international trade right now and there and this is an ongoing stepping duty order so there are [00:17:37] Speaker 05: rolling opportunity for administrative reviews of this issue. [00:17:41] Speaker 04: Can you help me with part of Blue Scope's response at A3158, that top sentence there? [00:17:49] Speaker 04: I don't know if we can read it in court, because some of it's in brackets. [00:17:53] Speaker 04: But it seems to have some reference to the price that AIS charged to BSA. [00:18:02] Speaker 04: And it seems to suggest that the supply agreement has something to do with that price. [00:18:06] Speaker 04: Can you help me out on that? [00:18:07] Speaker 05: Yes, in preparing for the argument in looking to 3156 to 3158, we also struggled to read that consistently with the source documents. [00:18:20] Speaker 05: But I think that it's telling that US Steel's primary argument in its reply brief and here before the court is focusing on this questionnaire response, which really is blue scope characterizing the source documents. [00:18:30] Speaker 05: And it's not looking back to the source documents themselves, which are the supply agreement and the invoice. [00:18:36] Speaker 04: Well, I think there's a few different ways to read this response. [00:18:46] Speaker 05: One possible way is that, as I just mentioned, when you look to the different component parts of the price that Blue Scope America has paid, it does include all the component parts that would make up a delivered duty paid price because it covers the entry value, it covers the anti-dumping duties. [00:19:01] Speaker 05: and it covers the cost of shipping. [00:19:04] Speaker 05: And again, you can see that at appendix page 2110. [00:19:08] Speaker 05: But it is inconsistent with the understanding established by the supply agreement, which is the delivered duty paid price for Steelscape. [00:19:20] Speaker 05: And then, for example, if the court [00:19:22] Speaker 05: This is also BPI, so we can't get into the specific numbers, but if the court looked at Appendix page 219, that's an example of an invoice to Blue Scope Americas. [00:19:32] Speaker 05: And there's different labels of how the shipment is treated, and it's not DDP. [00:19:37] Speaker 04: So that is more underlying evidence in tension with the response Blue Scope gave. [00:19:43] Speaker 05: Right, but it is substantial evidence in support of Commerce's findings. [00:19:47] Speaker 04: So even if, that was going to be my next question, even if we somehow put some weight, if that were for us to do, on the response from Blue Scope, you would say there's still substantial evidence left to support Commerce? [00:20:01] Speaker 05: Yes, and looking to, again, the supply agreement, which established it, which is clear that it's all about purchase orders to Steelscape, the invoices, including at appendix pages 149 to 332, and I especially highlight appendix pages 219 and 243, I believe 242 to 243 are the entry documents, and they align with the different relevant prices [00:20:26] Speaker 05: in that invoice and as well as Appendix page 2110 which has this breakdown and pulling out the different component parts from the formula price and reverse engineering it to the price paid by BSA. [00:20:41] Speaker 05: All of those provide substantial evidence in support of Commerce's findings and the Court of International Trade did explain the transfer pricing in a simple way at Appendix page 15 and the Court of International Trade also [00:20:56] Speaker 05: reached the same conclusion and found substantial evidence in support of Commerce's finding. [00:21:05] Speaker 05: If there are no further questions, we ask support to affirm. [00:21:20] Speaker 01: I'd like to ask that you focus your argument on anything that you have to add that is different from or unless you really have a different opinion than what was already offered. [00:21:32] Speaker 02: No. [00:21:33] Speaker 02: May it please the court. [00:21:34] Speaker 02: I believe the government counsel has done a very good job in explaining why the determination should be affirmed. [00:21:41] Speaker 02: And if I got 30 seconds, and I believe that both Judge Hughes and, Your Honor, Chief Judge Moore crystallized it. [00:21:49] Speaker 02: This is a substantial evidence case. [00:21:51] Speaker 02: So there needs to be evidence of reimbursement. [00:21:55] Speaker 02: And Judge Hughes said your entire case is based on this DDP term, which is in an agreement between BSA and Steelscape. [00:22:04] Speaker 01: OK, just to be clear, you're getting way too emotional about the trade case. [00:22:07] Speaker 01: That's just not permitted. [00:22:09] Speaker 01: I'm teasing. [00:22:10] Speaker 02: I apologize. [00:22:10] Speaker 02: 35 years doing trade cases, Your Honor, I get a little, you know. [00:22:15] Speaker 02: You must be excellent at cocktail parties. [00:22:17] Speaker 02: Exactly. [00:22:19] Speaker 02: People gravitate to me. [00:22:20] Speaker 02: Thank you, Your Honor. [00:22:21] Speaker 02: Well done. [00:22:22] Speaker 01: OK, thank you, counsel. [00:22:25] Speaker 01: Ms. [00:22:25] Speaker 01: Shulman, you have some rebuttal time. [00:22:32] Speaker 00: Thank you, Your Honor. [00:22:33] Speaker 00: Your Honor mentioned the letter of the regulation. [00:22:35] Speaker 00: And I would like to turn to that. [00:22:37] Speaker 00: The regulation here, 19 CFR 351-402-F, only references three parties, the producer, exporter, and importer. [00:22:46] Speaker 00: Those are the relevant parties here. [00:22:48] Speaker 00: And the record establishes that the transaction between the foreign producer and the importer was meant to include anti-dumping duties in the invoice price, not only because [00:22:58] Speaker 00: Blue Scope said so at appendix 3156 and 3157, but also because the supply agreement did in fact apply to that transaction. [00:23:06] Speaker 00: And you can see that on the record because they provided the supply agreement in response to a question as to how they price their goods to their importer. [00:23:14] Speaker 00: You can see that at appendix 114 and appendix 14. [00:23:18] Speaker 00: And I believe it was Judge Stark who asked previously, is there evidence on the record that the price to the importer was explicitly lowered for anti-dumping duties? [00:23:28] Speaker 00: And I would say, yes, there is. [00:23:30] Speaker 00: There is on the record. [00:23:32] Speaker 00: It's the confidential record at appendix 2110. [00:23:36] Speaker 00: But I would encourage your honors to look at that page and see what they did with the anti-dumping duties and whether they were included in the invoice price or not. [00:23:45] Speaker 00: And but commerce didn't, in fact, engage with any of these facts. [00:23:50] Speaker 00: In the final analysis memo that opposing counsel referenced, commerce focuses on entered value. [00:23:58] Speaker 00: And the problem here is entered value should not have been the same as invoice price because the company didn't do what customs says to do in a DDP sale, which is include the [00:24:12] Speaker 00: the anti-dumping duties in the invoice price and exclude them from entered value. [00:24:18] Speaker 00: And so by excluding the anti-dumping duties from the invoice price, the foreign producer assumed the expense of those duties, which is reimbursement under the law. [00:24:30] Speaker 00: Unless there are any further questions, I will close there. [00:24:33] Speaker 01: I want to thank all counselors. [00:24:34] Speaker 01: All three of you did a very nice job. [00:24:36] Speaker 01: Thank you. [00:24:37] Speaker 01: This case is taken under submission.