Brighter days are here to stay for CS Wind Corp., a Korean multinational company engaged in the production of wind towers.
On August 12, 2016, the US Court of Appeals for Federal Circuit (CAFC) issued its judgment on an appeal filed by CS Wind Corp. and its wholly owned subsidiary CS Wind Vietnam Co. Ltd. (collectively, CS Wind), against the ruling of the lower Court, the US Court of International Trade, New York (CIT), in connection with the US Department of Commerce’s (DOC) final determination in the Anti-dumping (AD) proceedings on exports of Utility Scale Wind Towers from Vietnam to US market. Out of three issues before the superior Court, CAFC allowed CS Wind’s appeal on one issue, sustained CIT’s decision on another issue and vacated CIT’s decision on the third issue, remanding it to DOC for a redetermination, consistent with the opinion of CAFC. As discussed below, this is a huge development for the Korean holding company.
The Vietnam connection requires some explanation. In pursuit of establishing low cost manufacturing export hubs, CS Wind Corp. established a manufacturing plant for producing wind towers (used as a base for installing wind turbines) in Vietnam and was soon exporting significant volumes to US. In order to stymie its US market share, US Wind Tower Trade Coalition (WTTC) filed an AD Petition on exports of Utility Scale Wind Towers from Vietnam in December 2011. CS Wind, being the largest exporter of subject merchandise to US market, was selected as a mandatory respondent for a detailed examination. The AD case was prosecuted before the agency for one full year and involved submissions of huge amount of data, information and detailed arguments and rebuttal arguments by CS Wind as well as the US petitioner, WTTC. In the Final determination issued in December 2012, DOC imposed a prohibitively high AD duty of 51.5% on CS Wind. Consequently, CS Wind was effectively shut out of the US market.
Aggrieved with the agency decision, CS Wind challenged it before the lower court, CIT, in early 2013. CIT agreed with CS Wind on a number of issues and remanded the matter twice to DOC for reconsideration. Ultimately, in its decision of May 2015, CIT ruled in favor of CS Wind on several issues, most notably, the valuation of steel plate. As a result, CS Wind’s AD duty dropped precipitously from 51.5% to 17.02% only. This was indeed a significant victory for CS Wind. Even so, CIT ruled against CS Wind on three issues – weight adjustments, market economy purchases from Korea and financial ratios.
CS Wind promptly challenged the lower Court’s decision before the superior Court, CAFC. After extensive briefings and oral arguments, CAFC was persuaded in favor of CS Wind on the issue of weight adjustments and also remanded the issue of financial ratios. By out rightly winning the weight adjustments issue, CS Wind’s AD duty has further dropped to single digits, actually close to de minimis levels of 2%. If CS Wind goes on to win the issue of financial ratios (very likely), its AD rate will drop below 2%, in which case the AD Order against CS Wind will be revoked, thereby setting it free to export to the US market, unencumbered by any considerations of AD duty liabilities.
CS Wind’s remarkable turnaround in the litigation has happened on account of its victories on several surrogate value issues, most notably, valuation of steel plate. Vietnam, being a non-market economy country, the DOC determines the fair value of goods based on surrogate value data from a third country. In this case, the surrogate country is India. CS Wind’s surrogate value expert worked diligently over months in India, developing a new steel price database, Steelguru, which was ultimately accepted by the CIT. Likewise, the surrogate value expert’s contribution was also notable in persuading the agency to prefer the financial statement of an Indian wind tower Co, Ganges International, over several alternative financial statements proposed by WTTC. The remanded issue, which would finally determine whether CS Wind is able to entirely escape the burden of AD duties, concerns the proper computation of financial ratios for the same Ganges’ financial statement. As such, the high quality surrogate value information presented by CS Wind’s Counsel constitutes the single most important reason behind the astounding turnaround in this case.
CS Wind’s remarkable success story finally pitchforks the Korean multinational to the status of a leading exporter of highly specialized and customized wind energy equipment to the US market. With its principal competitors - Chinese exporters - yanked out of the US market on account of a very high combined AD and CVD duties, CS Wind stands to gain a large chunk of the lucrative and rapidly expanding US market for wind energy equipment.
Dharmendra N. Choudhary is a Washington DC based International Trade Attorney and a globally acclaimed surrogate value expert with the law firm of GDLSK LLP. He has been a Counsel to several Korean exporters in US Anti-dumping proceedings.