Mexican Steel Wire Exporter Again Says Commerce Needs to Be Careful in Circumvention Inquiries
Mexican steel wire exporter Deacero argued again Oct. 20 that the Commerce Department shouldn't treat circumvention inquiries involving third-country processing the same as those involving U.S. processing (Deacero v. United States, CIT # 24-00212).
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Deacero exports its steel wire to its own affiliated U.S. production facilities for completion. It was hit with a finding that it was circumventing antidumping and countervailing duty orders on prestressed concrete steel wire from Mexico under the more rarely used Section 781(a) of the 1930 Tariff Act. In a May motion for judgment, it argued that Commerce’s approach to domestic processing inquiries was too aggressive, threatening U.S. manufacturing on principle (see 2505270002).
In July and August, the U.S. (see 2507240013) and petitioners (see 2508120065) disagreed. They called the distinction between third-country and domestic processing "baseless" and argued that Commerce’s finding regarding Deacero was reasonable.
But the “best reading” of Section 781(a) would require circumvention inquiries to focus on the subject merchandise itself, not the merchandise’s upstream products, the exporter argued. That reading “respects the Congressional objective of protecting legitimate investments in the United States, like Deacero’s,” it said.
The U.S. and petitioners were “downplaying” the differences between 781(a) and 781(b), which covers circumvention inquiries into products that underwent third-country processing, it said. For example, it was notable in itself that Congress separated U.S. processing and third-country processing into separate statutory provisions, the exporter said.
And none of the cases the two parties cited in their opposition briefs dealt with 781(a), it observed.
It also disagreed that Commerce’s circumvention finding was reasonable. Steel wire manufacturing requires at least four steps, the exporter said; but Commerce wrongly collapsed the process down to two steps to make its finding.
Commerce also "repeatedly relied" on the description of the production process for Deacero’s steel wire from the International Trade Commission’s own reports, it said, but never “meaningfully engage[d]” with those reports, which, unlike Commerce, also determined that steel wire manufacturing was a four-step process.
It denied the petitioners’ claim that it itself had described a two-step process. Rather, it said, the petitioners were citing part of the exporter’s response to a questionnaire prompt that specifically asked Deacero to describe its production process from “steel melting through wire production” along with “the sourcing of raw materials.” At the time, Deacero objected to the prompt "and devoted a full page of its response to explaining why Commerce’s description of the production process was not only wrong, but inconsistent with the petitioners’ own description and the ITC’s," it said.