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Guangdong Wireking Housewares & Hardware Co., Ltd. v. United States

United States Court of Appeals, Federal Circuit

March 18, 2014


Appeal from the United States Court of International Trade in No. 09-CV-0422, Senior Judge Nicholas Tsoucalas.


JAMES P. DURLING, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were DANIEL L. PORTER, CHRISTOPHER DUNN, MATTHEW P. McCULLOUGH, and ROSS BIDLINGMAIER.

ALEXANDER V. SVERDLOV, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief were STUART F. DELERY, Assistant Attorney General, JEANNE E. DAVIDSON, Director, and FRANKLIN E. WHITE, JR., Assistant Director. Of counsel on the brief were JOHN D. McINERNEY, Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC, DANIEL J. CALHOUN and DEVIN S. SIKES, Attorneys.

PAUL C. ROSENTHAL, Kelley Drye & Warren LLP, of Washington, DC, argued for defendants-appellees Nashville Wire Products, Inc., et al. With him on the brief were KATHLEEN W. CANNON, BENJAMIN BLASE CARYL, and KATHERINE E. WANG. Of counsel on the brief was DAVID C. SMITH, JR.

Before DYK, O'MALLEY, and CHEN, Circuit Judges. OPINION filed by Circuit Judge DYK. Opinion concurring in the result filed by Circuit Judge O'MALLEY.


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Dyk, Circuit Judge.

Appellant Guangdong Wireking Housewares & Hardware, Co., Ltd. (" Wireking" ) appeals from a judgment of the Court of International Trade (" Trade Court" ). In

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2012, Congress enacted new legislation that overruled our decision in GPX Int'l Tire Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011) (" GPX I " ), reh'g granted, 678 F.3d 1308 (Fed. Cir. 2012) (" GPX II " ), and permitted the imposition of both antidumping and countervailing duties with respect to importers from non-market economy (" NME" ) countries. Because this law is retroactive and does not require the Department of Commerce (" Commerce" ) to adjust for any double counting that may result from the retroactive imposition of both countervailing and antidumping duties, the appellant argues that it violates the Ex Post Facto Clause of Article I, Section 9 of the U.S. Constitution. We affirm the Trade Court's judgment that the new law does not violate the Ex Post Facto Clause.


I. Legislative and Judicial History

This case concerns two prior decisions of this court, GPX I and GPX II, and newly enacted legislation overruling our decision in GPX I.

The Tariff Act of 1930, as amended, permits Commerce to impose two types of duties on imports that injure domestic industries: First, Commerce may levy antidumping duties on goods " sold in the United States at less than... fair value." 19 U.S.C. § 1673 (2006). Second, Commerce may impose countervailing duties on goods that receive " a countervailable subsidy" from a foreign government. Id. § 1671(a). Thus, antidumping duties remedy unfair conduct on the part of importers, while countervailing duties are directed towards the unfair conduct of foreign governments.

In the case of goods imported from market economy countries, Commerce may impose both antidumping and countervailing duties. GPX I, 666 F.3d at 734. Commerce's ability to collect both types of duties from market economy importers has long been accepted. The antidumping duty equals the amount the good's price in the exporting country (the " home market price" or " normal value" ) exceeds its price in the United States (the " export price" or " constructed export price" ). See 19 U.S.C. § § 1673, 1677a-1677b. If the importer is selling its product at a lower price in the United States than in its home market, this difference will result in an affirmative dumping margin. Whether a product is selling for less than fair market value can be determined by comparing the good's normal values with export (or constructed export) prices for comparable merchandise, using statistically calculated weighted averages or data from individual transactions. See id. § 1677f-1(d)(1)(A).

The countervailing duty is " the amount of the net countervailable subsidy." See id. § 1671(a). In other words, it equals the amount by which a foreign government subsidizes a particular product. To the extent that the subsidy reduces the home market price, the antidumping duty will be correspondingly reduced. Id. § 1677f-1(f)(1)(C).

With respect to NME countries, the method of calculating antidumping duties creates the possibility of double counting when both antidumping and countervailing duties are imposed. In NME countries, the " normal value" of a good is not calculated based on the actual home market sales price for antidumping purposes if Commerce determines that the available information does not permit it to calculate the good's " normal value." Id. § 1677b(c)(1)(B). Instead, in that scenario, the " normal value" is a surrogate calculation for the home market price in NME countries. The antidumping statute requires Commerce to estimate this " normal value" --the home market price--based on

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data from " appropriate" market economy countries. Id. Thus, Commerce uses unsubsidized market economy prices to calculate the " normal value" of NME imports. This method of calculating " normal value" or home market price does not take account of the subsidization NME importers may receive that reduces the home market price. Therefore, the dual imposition of antidumping and countervailing duties on NME importers may double count for the subsidization advantage NME importers enjoy.

The history of countervailing duties with respect to NME countries is recounted in our GPX I decision and need not be repeated in detail here. See GPX I, 666 F.3d at 734-37. Briefly, until recently, countervailing duty law made no explicit provision with respect to NME countries and provided no explicit guidance as to how such duties should be levied on those countries. Commerce also maintained that it could not impose countervailing duties on NME importers. Id. at 735. However, in 2007, Commerce reversed its long-standing position and announced that it could and would apply countervailing duties to products of China, a NME country. Id.

This major policy change triggered the GPX I litigation. There, two Chinese tire manufacturers contested Commerce's imposition of countervailing duties on their imports, contending that countervailing duties could not be imposed with respect to China. Id. at 736. Based on an extensive review of the history of the Tariff Act, focusing on its subsequent amendments and reenactments, this court found that " in amending and reenacting the trade laws in 1988 and 1994, Congress adopted [Commerce's] position that countervailing duty law does not apply to NME countries.... We affirm the holding of the Trade Court that countervailing duties cannot be applied to goods from NME countries." Id. at 745.

About two and a half months after we released GPX I, Congress enacted new legislation that overruled our GPX I decision. See 158 Cong. Rec. H1167 (daily ed. Mar. 6, 2012) (statement of Rep. Camp) (" This legislation... overturns an erroneous decision by the Federal [C]ircuit that the Department of Commerce does not have the authority to apply these countervailing duty rules to nonmarket economies." ). The new law authorizes Commerce to impose countervailing duties on NME importers both prospectively as well as retrospectively.[1] To assure compliance with the United States' World Trade Organization (" WTO" ) obligations, this law contains a provision that instructs Commerce to " reduce the antidumping duty [applied to NME imports] by the amount of the increase in the weighted average dumping margin estimated by [Commerce] [to result from the imposition of countervailing duties]." Application of Countervailing Duty Provisions to Nonmarket Economy Countries, § 2(a), Pub. L. No. 112-99, March 13, 2012, 126 Stat. 265 (March 13, 2012) (codified as amended at 19 U.S.C. § 1677f-1(f)(1)(C)). Thus, the new law instructs Commerce to reduce the duties applied to NME imports when the antidumping and countervailing duties imposed on those goods double count for the same unfair trade advantage. This double-counting provision applies only prospectively to proceedings initiated after March 13, 2012, the date of the new law's

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enactment. Id. § 2(b). Trade proceedings initiated between November 20, 2006, and March 13, 2012, are subject to both antidumping and countervailing duties but do not benefit from this double-counting adjustment. Id. § § 1(b), 2(b).

At the time this new legislation was enacted, the government had a pending petition for rehearing in GPX I, and the mandate had not yet issued in that case. On March 23, 2012, the United States filed a letter brief, requesting, in light of the new legislation, that the Court vacate GPX I. We granted the government's petition for rehearing, but declined to vacate our decision. Issuing a further decision on May 9, 2012 ( GPX II ), we determined that the new legislation changed the law: " [T]wo things are clear from the new legislation. First, Congress clearly sought to overrule our decision in GPX.... Second,... Congress changed the law...." GPX II, 678 F.3d at 1311.

The Chinese exporters argued that the new legislation was unconstitutional because " it attempts to prescribe a rule of decision for this case after [the Federal Circuit's] decision in GPX was rendered." Id. at 1312. Nevertheless, we concluded that this argument was meritless under Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 226, 115 S.Ct. 1447, 131 L.Ed.2d 328 (1995), and we were bound to apply the new law to the pending case as long as the new law was constitutional. See GPX II, 678 F.3d at 1312. The Chinese importers also challenged the constitutionality of the new law because it provided no retrospective double-counting adjustment. They argued that it " creates a situation in which both antidumping and countervailing duties may be imposed, without providing a mechanism to account for potential double counting." Id. Noting that this argument raised a " question of first impression as to which we have received only cursory briefing," we remanded the case to the Trade Court to consider that constitutional issue in the first instance. Id. at 1312-13. Our decision in GPX II mandated on May 16, 2012.

II. The Wireking Case

Wireking was one of many importers directly affected by the significant change in trade law. The present case was pending in the Trade Court at the time of our remand in GPX I and raised the same constitutional issue as the GPX case. Before the new law was enacted, on July 31, 2008, U.S. producers filed a petition with Commerce and the U.S. International Trade Commission seeking the imposition of antidumping and countervailing duties on imports of certain kitchen appliance shelving and racks from China. In response to this petition, Commerce initiated dual duty investigations on August 20, 2008. These antidumping and countervailing duty investigations examined Wireking's imports from January 1, 2008, to June 30, 2008, and January 1, 2007, to December 31, 2007, respectively. By early 2009, Commerce selected Wireking as a mandatory respondent for both its antidumping and countervailing duty investigations. As a result of these investigations, Commerce issued final antidumping and countervailing duty determinations on July 24 and 27, 2009, respectively.

To determine the antidumping margin applicable to Wireking's imports, Commerce relied on the statutorily prescribed NME analysis: instead of using the actual home market prices for the inputs Wireking used to manufacture its kitchen shelving and racks, Commerce calculated the margin using a higher, " normal value" for the product's inputs based on market economy values of the inputs. The primary raw material (input) Wireking used to manufacture kitchen shelving and racks

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was steel wire rod. Accordingly, Commerce used a surrogate, " normal value" of steel wire rod to calculate the home market price of Wireking's imports. This resulted in an antidumping duty rate equal to 95.99 percent.

Commerce also imposed a countervailing duty on Wireking of 13.30 percent. The bulk of this duty can be attributed to

the difference between the delivered world market price and what [Wireking] paid for wire rod produced by the [Government of China] during the [period of interest].... [Commerce] divided this by [Wireking's] total sales during the [period of interest]. On this basis, [Commerce] calculated a net countervailable subsidy rate of 11.76 percent ad valorem for Wire king [as a penalty for the wire rod subsidy it received].

J.A. 63 (internal citation omitted). Because the market economy rate used to calculate Wireking's antidumping duty was unaffected by the government subsidization Wireking received, Wireking contended that the " simultaneous imposition of these special NME [antidumping] measures and market economy [countervailing duty] measures... demonstrates the imposition of a double remedy" and was improper. Appellant's Br. 7. Ultimately, Commerce rejected this argument and imposed a net countervailing duty rate of 13.30 percent on Wireking.

Wireking appealed Commerce's final antidumping and countervailing duty determinations to the Trade Court on October 5, 2009. The Trade Court stayed Wireking's appeal, pending the outcome of the GPX proceedings. After our decision in GPX II mandated on May 16, 2012, Wireking amended its complaint to include the constitutional challenge to the new legislation.

Wireking did not contest Commerce's application of antidumping duties to Chinese imports; instead, it contested Commerce's simultaneous imposition of countervailing and antidumping duties, without adjusting for double counting for the same conduct.[2] Wireking contended that, due to this failure to eliminate double counting, the trade remedies were not related and proportional to the harm suffered and, therefore, constituted a penalty and violated the Ex Post Facto Clause.[3] At this stage of the proceedings, Wireking had not established the existence of double counting in this particular case, and if it had occurred, to what extent.

The Trade Court granted judgment in favor of the government. It declined to decide whether the new law had a retroactive effect, but found that Commerce's simultaneous imposition of antidumping and countervailing duties on Wireking was not penal and, therefore, did not violate the Ex Post Facto Clause even if it were retroactive. Guangdong Wireking Housewares & Hardware Co., Ltd. v. United States, 900 F.Supp.2d 1362, 1370-71

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(Ct. Int'l Trade 2013). The Trade Court first explained that " [i]t is well established that trade duties are remedial, not punitive," and " [t]he specific purpose of [countervailing duty] law is to 'offset' the harmful effects of foreign subsidies." Id. at 1370. The Trade Court then concluded that the new law was not punitive because Wireking failed to show " the absence of an association between the costs imposed and the actual harm done." Id. at 1371 (internal quotation marks omitted). Wireking timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5). We review the Trade Court's decision of the constitutional question de novo.


Article I, Section 9, Clause 3 of the Constitution states " [n]o Bill of Attainder or ex post facto Law shall be passed." U.S. Const. art. I, § 9, cl. 3. A law only violates the Ex Post Facto Clause if it (1) applies retroactively and (2) imposes a punishment for an act that was not punishable at the time it was committed or increases the punishment for an act that was committed before the new law was enacted. Weaver v. Graham, 450 ...

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