Viet Nam News
Việt Nam News spoke to Dharmendra N. Choudhary, who is counsel to CS Wind Vietnam, about the recent victory by the company in its appeal before the US Court of Appeals for Federal Circuit (CAFC). Choudhary is a widely acclaimed surrogate value expert. Excerpts from the interview.
How significant is the recent CAFC Opinion issued in case of CS Wind, Vietnam v. United States?
In its August 12, 2016 ruling, the CAFC disposed of all three issues appealed by CS Wind Vietnam, against the lower Court’s decision. Two points need to be noted here. First, CAFC ruled in favor of CS Wind on the issue of weight adjustments. As a result, CS Wind’s Anti-dumping duties dropped from 17.02% to low single digits. Second, CAFC vacated the lower Court’s order on the issue of how to value financial ratios (from Indian wind tower producers) and remanded the issue to the Department of Commerce (DOC) for a re-determination. If CS Wind succeeds on the remanded issue, the AD duty rate should drop below 2% and, consequently, DOC’s antidumping Order on CS Wind will be revoked. As a result, CS Wind will emerge as an attractive supplier of wind towers for US buyers, who understandably prefer sourcing from exporters with low or zero antidumping duty exposure.
Please tell us in brief about the challenges faced beginning from the DOC’s proceedings through the proceedings before the trial and superior Courts.
As you are aware, CS Wind was initially awarded a prohibitively high AD duty of 51.50% by the DOC. Let me underscore that even this result, which appears prohibitively high, was obtained only on account of winning several critical issues, such as separate rate eligibility and the choice of financial statements to value factory overhead. GDLSK Attorneys, led by their Trade Practice Chair, Bruce M. Mitchell, dutifully and diligently provided timely responses to all of the questionnaires issued by the DOC and followed it up with detailed legal briefs and rebuttal briefs. In total, GDLSK submitted several thousand pages of responses before the DOC. We also made a detailed oral presentation before DOC officials at hearings in Washington D.C. We also assisted DOC during the on-site verifications in South Korea and Vietnam, where the GDLSK team led by veteran Hong Kong based Partner, Andrew Schroth, successfully verified all of the written responses with CS Wind’s records.
Later, during appellate proceedings before the trial and superior Courts, GDLSK filed extensive briefs and reply briefs before the two Courts. New York based Partner, Ned Marshak, very ably argued the cases before the two Courts, persuasively answering all of the probing queries from the judges.
Surrogate value issues were the most contentious in this proceeding. I did extensive field research in India and helped compile a robust record on price data for several material and non-material inputs.
Where does CS Wind go from here ? What benefits accrue to CS Wind from this victory ?
The appeals court, CAFC, has directed the lower court, CIT, to remand the financial ratio computation issue back to the DOC. After the CIT remands the matter, the DOC will reconsider the issue in light of guidelines contained in the CAFC opinion and will issue a draft re-determination for comments by all interested parties. Thereafter, Commerce will submit its final re-determination before the CIT and ultimately, Commerce’s re-determination will be reviewed by the CAFC. In the course of the remand proceedings, we will vigorously present our case through written and oral arguments. We remain quite positive about our chances of success.
CS Wind’s success portends very well for the company in general and its US exports in particular. As we know, there is a global push towards production and utilization of renewable sources of energy. Of all the known sources of renewable energy, wind energy is the most rapidly expanding sector. Today, the U.S. wind industry is growing rapidly, driven by sustained production tax credits (PTCs) and rising concerns about climate change. The US Energy Information Administration (EIA) data shows that wind energy accounted for 4.7% of total energy production in the USA in 2015. Over the past decade, there has been a vigorous push to promote wind energy production. As per a report published by the US Department of Energy entitled, “20% Wind Energy by 2030”, wind energy has been projected to supply 10% of the country’s electricity in 2020, 20% in 2030, and 35% in 2050. The recent spurt in wind energy production and consumption suggests that this target is achievable. Accordingly, the sector will demand an exponential growth in the supply of wind energy equipment including wind towers. With little or no AD duty exposure, CS Wind would be a competitive player in the US wind energy market.
Are there any useful lessons to be drawn by other Vietnamese exporters from CS Wind’s success before the Commerce and Courts?
There are several takeaways from this case.
First, by aggressively pursuing litigation over the past four years, CS Wind has demonstrated the value of patience and perseverance in the face of adversity. Other Vietnamese exporters should learn not to despair quickly upon obtaining a bad result at the DOC, but rather to fight it out in the Courts. The courts proceed in a very fair and transparent manner and critically analyze the DOC’s determinations.
Second, CS Wind has wisely invested its resources on surrogate value research, which ultimately turned the case in its favor. Surrogate value issues are pivotal in other Vietnamese antidumping cases as well. As such, Vietnamese exporters would similarly benefit by focusing on surrogate value issues.
Third, CS Wind’s record keeping is excellent and the company has further strengthened its accounts through pre-review audits under the watchful oversight of its legal counsel. Notably, in the first administrative review (following the AD Investigation), the audit helped CS Wind obtain a 0.00% AD duty, i.e. CS Wind was found not to have dumped wind towers in the US market. Such pre-review audits will be very helpful to other exporters also.- VNS