Slip Op. 07-105

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS

________________________________________

SHANDONG HUANRI (GROUP) GENERAL CO.; :

SHANDONG HUANRI GROUP CO., LTD.; :

and LAIZHOU HUANRI AUTOMOBILE PARTS CO.,:

LTD. :

:

Plaintiff, : Court No. 05-00648

:

v. :

:

UNITED STATES, :

:

Defendant :

:

:

THE COALITION FOR THE PRESERVATION OF :

AMERICAN BRAKE DRUM AND ROTOR :

AFTERMARKET MANUFACTURERS :

:

Defendant-Intervenor. :

________________________________________:

July 5, 2007

Held: The United States Department of Commerce’s final results

are affirmed. Plaintiffs’ motion for judgment upon the agency

record is denied. This action is dismissed. 

Trade Pacific, PLLC, (Robert G. Gosselink) for Shandong Huanri

(Group) General Co.; Shandong Huanri Group Co., Ltd.; and Laizhou

Huanri Automobile Parts Co., Ltd., Plaintiffs. 

Peter D. Keisler, Assistant Attorney General, Civil Division,

United States Department of Justice; Jeanne E. Davidson,

Director, Commercial Litigation Branch, Civil Division, United

States Department of Justice; Ada E. Bosque, United States

Department of Commerce Office of Chief Counsel for Import

Administration, of counsel, for defendant.
Court No. 05-00648 Page 2

As a future practice note, the Court directs 1

Plaintiffs’ attention to Section 2B of the Court’s Chambers

Procedures, entitled “Briefs and Appendices.” This section

instructs that:

Movant’s and respondent’s briefs shall not

Porter, Wright, Morris & Arthur, LLP, (Leslie Alan Glick; Renata

Brandao Vasconcellos) for The Coalition for the Preservation of

American Brake Drum and Rotor Aftermarket Manufacturers,

Defendant-Intervenor. 

Tsoucalas, Senior Judge: Before the Court is Plaintiffs’ Shandong

Huanri (Group) General Co., Shandong Huanri Group Co., Ltd. and

Laizhou Huanri Automobile Parts Co., Ltd. (collectively

“Plaintiffs” or “Huanri”) motion for judgment upon the agency

record brought pursuant to USCIT Rule 56.2. Plaintiffs challenge

aspects of the United States Department of Commerce’s (“Commerce”)

determination Brake Rotors From the People’s Republic of China:

Final Results and Partial Rescission of the Seventh Administrative

Review; Final Results of the Eleventh New Shipper Review, 70 Fed.

Reg. 69,937 (Nov. 18, 2005) (“Final Results”). Plaintiffs contend,

inter alia, that Commerce changed its separate rates methodology,

and did so without notice and comment. See Pl.’s R. 56.2 Mot. J.

Upon Agency Rec. (“Pl.’s Br.”) at 10 (“Commerce abused its

discretion when it changed its separate rates practice[.]”). For

the following reasons, the Court finds Plaintiffs’ contentions to

be without merit, and denies their motion.1
Court No. 05-00648 Page 3

exceed 30 pages in length, except in trade

cases which shall not exceed 40 pages. Reply

briefs in all cases shall not exceed 15

pages. . . No brief which exceeds these

requirements may be filed without prior

written approval of the Court, leave for

which will be freely given upon good cause

shown.

This rule, and all other Chambers Procedures, are publicly

available at http://www.cit.uscourts.gov. In the future, if

Plaintiffs’ counsel wishes to exceed the prescribed page limits

it shall seek the permission of this Court. 

JURISDICTION & STANDARD OF REVIEW

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) 

(2000) and 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). When reviewing

the final results in antidumping administrative reviews “[t]he

court shall hold unlawful any determination, finding, or conclusion

. . . found . . . to be unsupported by substantial evidence on the

record, or otherwise not in accordance with law . . . .” 19

U.S.C. § 1516a(b)(1)(B)(i). “Substantial evidence is more than a

mere scintilla.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229

(1938). “Substantial evidence is ‘such relevant evidence as a

reasonable mind might accept as adequate to support a conclusion.’”

Huaiyin Foreign Trade Corp. (30) v. United States, 322 F.3d 1369,

1374 (Fed. Cir. 2003) (quoting Consol. Edison Co., 305 U.S. at

229). In determining the existence of substantial evidence, a

reviewing Court must consider “the record as a whole, including
Court No. 05-00648 Page 4

The subject merchandise sold by Huanri General to the 2

United States was purchased from, and produced by its subsidiary,

Laizhou Huanri Automobile Parts. See Pl.s’ Br. at 2. Following

the period of review, Huanri General was sold to its current

successor in interest, Shandong Huanri Group Co., Ltd. Id. 

The period of review for the seventh administrative 3

review is from April 1, 2003 to March 31, 2004. 

evidence that supports as well as evidence that ‘fairly detracts

from the substantiality of the evidence.’” Huaiyin, 322 F.3d at

1374 (quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556,

1562 (Fed. Cir. 1984)). 

BACKGROUND

The facts of this case have been fully set forth in the prior

decisions of this Court. The facts relevant to the instant inquiry

are as follows. Plaintiff Shandong Huanri (Group) General Company

(“Huanri”) was an exporter of brake rotors (“subject merchandise”) 2

subject to the antidumping (“AD”) duty order on Brake Rotors From

the People’s Republic of China during the seventh administrative

review. See Brake Rotors from the People’s Republic of China, 69 3

Fed. Reg. 30,282 (Dep’t Commerce May 27, 2004) (initiation).

Defendant-Intervenor, The Coalition for the Preservation of the

American Brake Drum and Rotor Aftermarket Manufacturers

(“Coalition”), was a domestic petitioner in the original

antidumping investigation that resulted in the AD order, and an

interested party in all reviews of the order. See Brake Rotors
Court No. 05-00648 Page 5

From the People’s Republic of China, 62 Fed. Reg. 18,740 (Dep’t

Commerce Apr. 17, 1997) (antidumping order). In both the

preliminary and final results of the seventh administrative review

of the AD order, Commerce denied Huanri General a separate rate.

See Brake Rotors From the People’s Republic of China: Preliminary

Results and Partial Recision of the Seventh Administrative Review

and Preliminary Results of the Eleventh New Shipper Review, 70 Fed.

Reg. 24,382, 24,387 (May 9, 2005) (“Preliminary Results”); Final

Results, 70 Fed. Reg. at 69,939. 

Commerce denied Huanri a separate rate, primarily, on the

basis that Huanri was controlled by the Panjacun Village Committee.

As there was record evidence indicating that the Village Committee

operated under the leadership of the Chinese Communist Party,

Commerce found that Village Committee was a form of Chinese

government. Indeed, in its final results, Commerce explained that

Huanri was “controlled by the Panjacun Village Committee, and . .

. determined that this entity was subject to central government

control.” As it did in its preliminary results, Commerce continued

“to find that Huanri is not entitled to a separate rate in these

final results. Because [Commerce] has determined that Huanri does

not qualify for a separate rate, [Commerce] determine[s] that

Huanri is part of the PRC-wide entity and will be subject to the

PRC-wide rate.” Final Results, 70 Fed. Reg. at 69,939 (internal
Court No. 05-00648 Page 6

citation omitted). 

Such a finding was necessary because of the People’s Republic

of China’s (“PRC”) status as a nonmarket economy (“NME”) country.

As will be discussed infra, in a NME country, a presumption of

government control for exporters automatically attaches. See Coal.

for the Preservation of Am. Brake Drum & Rotor Aftermarket Mfrs. v.

United States, 23 CIT 88, 100, 44 F. Supp. 2d 229, 242 (1999)

(“Coalition I”) (finding that pursuant to “the broad authority

delegated to it from Congress, Commerce has employed a presumption

of state control for exporters in a nonmarket economy.”). Unless

this presumption is rebutted, Commerce assigns the exporter the

country-wide antidumping duty rate. Transcom Inc. v. United

States, 182 F.3d 876, 882 (Fed. Cir. 1999). In order to rebut this

presumption and qualify for a separate, company-specific rate, an

exporter must “affirmatively demonstrate its entitlement to a

separate, company-specific margin by showing an absence of central

government control, both in law and in fact, with respect to

exports.” Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed.

Cir. 1997). In the instant matter, Commerce determined that Huanri

failed to rebut this presumption with respect to

de facto government control. 

Commerce took the following steps in determining whether

Huanri was free from de facto government control. In investigating
Court No. 05-00648 Page 7

Huanri’s eligibility for a separate rate, Commerce issued Huanri a

Questionnaire in which it asked the respondents to “describe and

explain” who “owns” and “controls” its company, including the

“company’s relationship with the national, provincial, and local

governments, including ministries or offices of those governments.”

See Huanri General’s Resp. to the Department’s Original

Questionnaire in the Seventh Administrative Review. In its

questionnaire response, Huanri maintained that it “has no

relationship with the national, provincial, and local governments,

including ministries or offices of those governments.” Id. Next,

Commerce considered the “Organic Law on the Village Committee of

the People’s Republic of China of 1999" (“VCL”) placed upon the

record by the Coalition. Thereafter, Commerce issued a

supplemental questionnaire to Huanri, inquiring specifically into

whether the Panjacun Village Committee owned and controlled Huanri.

See Resp. Opposition Pls.’ Mot, J. Upon Agency Rec. (“Response”) at

2. Therein, Huanri represented that it is “collectively owned” by

the villagers of Panjacun Village, and further stated that the

Village Committee “has control over the investment of capital

raised by the villagers.” See Shandong Huanri Group General

Company Supplemental Questionnaire at 3–4. From March 23–26, 2005,

Commerce conducted an onsite verification of Huanri in Panjacun

Village, China. During its verification Commerce conducted an

onsite inspection of the manufacturers’ and exporters’ facilities,
Court No. 05-00648 Page 8

and examined relevant sales and financial records. See

Verification of the Response of Shandong Huanri Group General

Company (“Verification Report”) at 13-17. 

Following its investigation, Commerce issued its Preliminary

Results, denying Huanri a separate rate. See Preliminary Results,

70 Fed. Reg. at 28,387. Therein, Commerce preliminarily found

“that Huanri General, by virtue of the applicability of . . . other

PRC laws . . ., has demonstrated an absence of de jure central

government control.” Id. at 24,388. This notwithstanding,

Commerce preliminarily denied Huanri a separate rate because Huanri

had not demonstrated an absence of de facto control. Id. at

24,388–89. Only the absence of de facto control is at issue in

the instant matter. Together with the issuance of the Preliminary

Results, Commerce also invited special comments and additional

supporting information concerning this issue. Id. at 24,389; see

also Department’s Letter of June 6, 2005.

On November 18, 2005, Commerce issued its final results. See

Final Results, 70 Fed. Reg. at 69,939; see also Issues and Decision

Memorandum for the Final Results in the 2003/2004 Administrative

Review of Brake Rotors from the People’s Republic of China (Nov. 7,

2005) (“Issues & Dec. Mem.”). Consistent with its Preliminary

Results, therein, Commerce denied Huanri a separate rate because it

concluded that the Panjacun Village Committee is “a form of
Court No. 05-00648 Page 9

government in the PRC.” Issues & Dec. Mem. at 18. Commerce

explained that “record evidence includ[ing] various provisions of

the Village Committee Law, the petitioners’ analysis thereof, and

references to academic publications . . . indicate . . . that these

Village Committees are, in fact, government entities.” Id.

Moreover, it found that “Huanri had not demonstrated a de facto

absence of government control with respect to making its own

decisions in key personnel selections, the use of its profits from

the proceeds of export sales, and the authority to negotiate and

sign contracts and other agreements.” Id. at 20 (finding that the

Village Committee is “inextricably involved in . . . decisions at

Huanri.”). 

This finding by Commerce represents a departure from that of

the fifth and sixth administrative reviews. See Brake Rotors from

the People’s Republic of China, 68 Fed. Reg. 25,861, 25,863 (Dep’t

Commerce May 14, 2003) (final results); Brake Rotors from the

People’s Republic of China, 69 Fed. Reg. 42,039, 42,040 (Dep’t

Commerce July 13, 2004) (final results). Commerce explained its

departure in the seventh administrative review by noting that there

was “even more indicia of government control, specifically the

Huanri Verification Report and the Village Committee Law, . . .

than in the prior Huanri review . . . . [As a result,] the

Department . . . reached a different conclusion in this review than
Court No. 05-00648 Page 10

The case was later dismissed on jurisdictional grounds, 4

but the substantive law remains persuasive, and relevant to this

action. See Jilin Henghe Pharm. Co. v. United States, 123 F.

App’x 402, 403 (Fed. Cir. 2005) (not published in the Federal

Reporter). 

in prior reviews after learning of the extent of the decisionmaking role of the Village Committee and after analyzing the

Village Committee Law, which was not analyzed in prior segments.”

Issues & Dec. Mem. at 20. 

In both the fifth and sixth administrative reviews, Commerce

found that Huanri met the criteria for the application of a

separate rate and in both reviews, it granted a separate rate of

0.00 percent. See id. The Coalition appealed Commerce’s decision

to grant Huanri a separate rate in the fifth administrative review.

See Coal. for the Preservation of Am. Brake Drum & Rotor

Aftermarket Mfrs. v. United States, 28 CIT __, __ 318 F. Supp. 2d

1305 (2004) (“Coalition II”) dismissed on other grounds; Coal. for

the Preservation of Am. Brake Drum & Rotor Aftermarket Mfrs. v.

United States, Slip Op. 01-00825 (June 21, 2005) (not published in

the Federal Supplement) (dismissing the action because the subject

merchandise had been liquidated). In that case, the Court remanded

the matter to Commerce to reconsider granting Huanri “a separate AD

duty rate in the absence of the company’s production of the PRC’s

Organic Law of the Village Committee[.]” See Coalition, 28 CIT at

__, 318 F. Supp. 2d at 1314.4
Court No. 05-00648 Page 11

For example, Plaintiffs argued that Commerce “should 5

not have adopted a new approach for determining whether Huanri

was eligible for a separate rate because Huanri had relied on the

Commerce Department’s previous methodology in deciding to sell

subject merchandise to the United States.” Pls.’ Br. at 11. 

Contra, Def.’s Br. at 18 (“Commerce uses a ‘retrospective’

assessment system where final liability for antidumping duties is

determined after the imports have entered the United States.”). 

The Court finds this, and the other ancillary arguments

unconvincing. See e.g., Pls’ Br. at 42 (“Commerce unfairly

punished Huanri General[.]”). 

On November 28, 2005, Plaintiffs commenced this action. In

their brief, Plaintiffs characterize the central issue as several

sub-issues. This matter, however, is properly understood as one

issue. As such, the Court shall not address Plaintiffs’ ancillary

arguments and will reflect only those pertinent to the Court’s

disposition of this matter. The issue here is properly viewed as 5

whether Commerce’s determination of government control at the

village-level is a change in its methodology. Related to this,

although not fully briefed by Plaintiffs, is whether this finding

is supported by substantial evidence. The Court will also briefly

address Plaintiffs’ claim-in-the-alternative that it should be

granted a village-wide rather than the PRC-wide rate, which the

Court also considers to be related to the methodology issue. 
Court No. 05-00648 Page 12

Commerce has treated the PRC as an NME in all past AD 6

investigations and continues to deem the PRC an NME within the

meaning of the Omnibus Trade and Competitiveness Act of 1988,

Pub. L. No. 100-418, § 1316(b), 102 Stat. 1107, 1187, 19 U.S.C.

§ 1677(18). 

ANALYSIS

A. Commerce’s Finding of De Facto Control at the Village

Level is Not a Change in Methodology.

Pursuant to the broad authority delegated to it by Congress,

Commerce employs “a presumption of state control for exporters in

a non-market economy.” See Sigma, 117 F.3d at 1405. Under this 6

presumption, exporters in an NME receive the country-wide rate,

unless the exporter can rebut this presumption by “affirmatively

demonstrat[ing] its entitlement to a separate, company-specific

margin by showing an ‘absence of government control, both in law

and in fact, with respect to exports.’” Id. (citation omitted);

see also Transcom Inc., v. United States, 5 F. Supp. 2d 984, 989

(1998). “Absence of de facto government control can be established

by evidence that each exporter sets its prices independently of the

government and of other exporters, and that each exporter keeps the

proceeds of its sales.” Sigma, 117 F.3d at 1405. Indeed, in

determining whether de facto government control exists, Commerce

examines evidence of whether: (1) the exporter sets its own export

prices independent of the government and other exporters; (2) each

exporter retains the proceeds of its sales; (3) the respondent has

the authority to negotiate and sign contracts and other agreements;
Court No. 05-00648 Page 13

and (4) the respondent has autonomy from the government in making

decisions regarding the selection of its management

(“Sparklers test”). See Sparklers from the People’s Republic of

China, 56 Fed. Reg. 20,588, 20,589 (Dep’t Commerce May 6, 1991)

(final determination); Silicon Carbide from the People’s Republic

of China, 59 Fed. Reg. 22,585, 22,587 (Dep’t Commerce May 2, 1994)

(final determination); see also Coalition I, 23 CIT at 101, 44 F.

Supp. 2d at 243. If an exporter/respondent fails to demonstrate a

single factor, Commerce will not assign a separate rate. See e.g.,

Certain Tissue Paper Products from the People’s Republic of China,

70 Fed. Reg. 7,475, 7,478 (Dep’t Commerce Feb. 14, 2005). 

Instead, where the company fails to rebut the presumption of state

control, Commerce assigns the NME-wide rate. See Sigma, 117 F.3d

at 1405. 

For the following reasons, the Court finds that Commerce’s

determination of de facto state control at the village-level is not

a change in its methodology. The Court further finds that

Plaintiffs’ claim that it should be granted what it calls a

“village-wide rate” rather than the PRC-wide rate lacks merit. 

a. Commerce Did Not Change its Methodology in Reaching its

Determination of De Facto State Control.

 In reaching its conclusion of de facto state control,

Commerce did not change its separate rates methodology but applied
Court No. 05-00648 Page 14

it to the specific facts and record evidence present in the instant

matter; some of which was not on the record in previous reviews

covering the subject merchandise. Accord Resp. Opposition Pls.’ M.

J. Agency Record (“Def.’s Resp.”) at 6 (“Commerce did not change

its methodology with respect to Huanri.); Def.-Int. Resp.

Opposition Pls.’ M. J. Agency Rec. (“Def.-Int. Resp.”) at 10.

(“[T]he agency simply addressed record evidence in this segment of

proceedings that was not upon the record in earlier segments.”).

Indeed, the Court finds that Commerce employed the methodology

consistently applied in past reviews but reached a conclusion

different from its past reviews based on information not previously

on the record, i.e., “The Organic Law on the Village Committee of

the People’s Republic of China” and data contained in Commerce’s

Verification Report. See generally The Organic Law on the Village

Committee of the People’s Republic of China,(“VCL”) Pet.’s

Submission of Sept. 15, 2004 (document issued by the Carter

Center); Verification Report, at 5–12.

This Court has repeatedly affirmed Commerce’s application of

the Sparklers test in determining whether there was an absence of

de facto government control. See e.g., Sigma Corp., 117 F.3d at

1405–07; Coalition I, 23 CIT at 100-01, 44 F. Supp. 2d at 242-43.

Here, Commerce addresses each of the factors of this four-prong

test in its Issues and Decision Memorandum. See Issues & Dec. Mem.
Court No. 05-00648 Page 15

at 18–23. Commerce’s analysis of these four factors is heavily

reliant upon the VCL and Verification Report, evidence critical,

yet missing from the prior administrative review records.

See Coalition II, 381 F. Supp. 2d at 1314; Issues & Dec. Mem. at 20

(“[T]here are even more indicia of government control, specifically

the Huanri Verification Report and the Village Committee Law, on

the record of this review than in the prior Huanri review[.]”). 

As an initial matter, Commerce found that “Huanri had not

demonstrated a de facto absence of government control with respect

to making its own decisions in key personnel selections, the use of

its profits from the proceeds of export sales, and the authority to

negotiate and sign contracts and other agreements.” See Issues &

Dec. Mem. at 19. Because Commerce determined that Huanri was not

able to affirmatively demonstrate its entitlement to a separate

rate, the presumption that exporters in an NME receive the countrywide rate attached. See Sigma Corp. v. United States, 117 F.3d at

1405.

Despite the presumption of PRC-wide control attaching, in its

Issues and Decision Memorandum Commerce engaged in a factor-byfactor analysis of the Sparklers test. See Sparklers, 56 Fed. Reg.

at 20,589. First, with respect to factor one, the authority to

negotiate and sign contracts and other agreements, Commerce set

forth the following which it found demonstrated that Huanri lacked
Court No. 05-00648 Page 16

the ability to negotiate and sign contracts independently. 

The village representatives (serving in the

capacity of Huanri General’s shareholder

representatives) decided during 2003 to

acquire the funds necessary for establishing a

tire production plant as part of Huanri

General’s operations, consistent with Article

19 of the Village Committee Law. However, to

pursue this objective (which required a

significant amount of capital), the village

representatives had to obtain the entire

capital investment amount from the Panjacun

Village Committee which subsequently furnished

it to Huanri General by obtaining a bank loan

(using the villagers’ households as

collateral) and by providing a portion of its

rental income received from land lease

agreements (see pages 5-6 and 10-12 of the

Verification Report). Therefore, we conclude

that Huanri General does not have the ability

to obtain its own loans. Rather, the evidence

on the record of this review indicates that

the local government’s assistance was required

for this purpose.

Issues & Dec. Mem. at 20. With respect to factor two, the

selection of management, Commerce determined that the “Panjacun

Village Committee is so intertwined in personnel, and involved in

key financing operations with Huanri General with respect to export

activities, that there can be no meaningful consideration of

separateness between the local PRC government and Huanri General.”

Id. at 19. Next, regarding the fourth Sparklers factor, Commerce

found that the government, rather than Huanri, retained the

proceeds of its export sales and did not make independent decisions
Court No. 05-00648 Page 17

regarding the disposition of profits or financing of losses. It

explained that:

Our verification findings further note that

the 41 village representatives (serving in the

capacity of Huanri General’s shareholder

representatives) have also been directly

involved in profit distribution decisions made

at Huanri General as evidenced by shareholder

meeting minutes examined at verification.

(See Verification Report at 12.) Therefore,

based on the facts mentioned above, we cannot

conclude that Huanri General makes its own

profit decisions. Rather, the evidence on the

record of this review indicates that the same

individuals who appointed the village

committee members also decided how Huanri

General’s profits are distributed, consistent

with Article 19 of the Village Committee Law.

Id. Commerce further found that “[d]ata contained in [the

Verification Report] indicates that the village committee decided

not to distribute Huanri General’s profits to the shareholders

after Huanri General’s first full year of operation (i.e. 2000).”

Verification Report at 12 (emphasis added). Moreover, “the

shareholder representatives [some of whom are Village Committee

Members] verbally informed the villagers of the decision to

reinvest Huanri General’s profits in the company rather than

distribute the profits to them.” Verification Report at 12. 

Lastly, although not providing specific facts as to the Village

Committee’s control over export prices, Commerce concluded that it

“continue[s] to find, in this review, that the Village Committee is

a level of the PRC government and that the Committee was
Court No. 05-00648 Page 18

Further indicia of government control may be found in 7

the Verification Report. Such information includes the facts

that: (1) the “Panjacun village committee (i.e., local government

entity) established Huanri General . . . and provided this

company with additional investment capital during the POR[.]” 

Verification Report at 4; (2) “Company officials stated that

prior to January 2004, Huanri Auto had an informal agreement with

the village committee that it would not have to pay land-use

rights as long as it hired local villagers.” Id. at 5; (3) “Data

. . . indicates that four of the five village committee members

were shareholders in Huanri General during the POR.” Id. at 6;

and (4) [T]wo of the shareholder representatives that elected

Huanri General’s board of directors were also village committee

members.” Id. at 11. 

inextricably involved in export-related decisions at Huanri.”

Issues & Dec. Mem. at 20. As such, Commerce examined and supported

its finding in applying the Sparklers test. 

In reaching its decision, Commerce specifically stated that it

reached a different conclusion in this review (that of de facto

government control) “than in prior reviews after learning of the

extent of the decision-making role of the Village Committee and

after analyzing the Village Committee Law, which was not analyzed

in prior segments.” Id. at 20. Commerce explained that its

determination “reflects the case facts and the new information

concerning the level of government control, specifically, the text

of the Village Committee Law, which provides for higher-level

government control, and the fact pattern which emerged in the 2003-

2004 POR . . . .” Id. at 21. (citing Verification Report, at 10- 7

12; Preliminary Results, 70 Fed. Reg. at 24,387, 24,388). 
Court No. 05-00648 Page 19

A close examination of several provisions of the VCL supports

Commerce’s conclusion of de facto state control. Indeed, the VCL

itself was “[a]pproved by the Fifth Session of the Standing

Committee of the Ninth National People’s Congress.” VCL at 1.

Further indicia of state government control and endorsement of

these laws is found in the Articles of the VCL. Commerce made the

following findings regarding the Articles of the VCL: (1) Article

1 states that it “is formulated in line with the relevant

requirements of [t]he Constitution of the People’s Republic of

China;” (2) Article 2 directs the Village Committee to “develop

public services, manage public affairs, mediate civil disputes,

help maintain social stability and report to the people’s

government villagers’ opinions, requests and suggestions;” (3)

Article 5 includes provisions that assign to village committees

certain economic responsibilities, such as coordinating village

production and promoting the “development of rural socialist

production and a socialist market economy;” (4) Article 19 allows

village committees to “manage land and other properties of the

village that are collectively owned by all villagers,” use income

collected from village collective companies, and initiate

development of new village collective economies; and (5) Article 29

indicates that “the standing committees of the People’s Congress of

provinces, autonomous regions and centrally-administered
Court No. 05-00648 Page 20

municipalities” exerts control by implementing this law in

accordance with regional conditions. See VCL at 1–5; Preliminary

Results, 70 Fed. Reg. at 24,387. Based on the VCL, inter alia,

Commerce concluded that the “party branch is in effect the core of

the village power structure.” Issues & Dec. Mem. at 18. 

In Coalition II, a case involving Huanri and the subject

merchandise in an earlier review, this Court endorsed Commerce’s

examination of control at the village level, and commented on the

necessity of analyzing the VCL. It found that “given the broad

statutory and concomitant administrative caution about a nonmarket

economy and the longstanding emphasis of the Communist Party on the

‘grass roots’ of China . . . the agency’s separate-rate test should

not be limited to proving absence of national-government ownership

but should be applied to whatever level of governmental control is

implicated.” Coalition II, 318 F. Supp. 2d at 1312–13. In

speaking on Huanri General, the Court observed that this

“collectively-owned enterprise thus may be a most-perfect form of

communism in action. As such, there would be little room to

differentiate between the business of Huanri General and that of

the village and governing village committee.” Id. at 1313

(emphasis in original). The Court continued, however, that “the

linchpin to this thesis is missing, namely, the village committee

law, which may or may not be a promulgation of the central
Court No. 05-00648 Page 21

government and which may or may not provide that government or a

subordinate, even grass-roots village, government with ultimate

nonmarket control.” Id. at 1314. Indeed, “without the content of

that law and the ITA’s analysis of the meaning thereof on the

record herein, this court is unable to affirm the foregoing de

facto reasoning.” Id. (“[N]one of the prior cases . . . ha[ve]

considered the nature and impact of that particular law under the

U.S. statute that requires the ITA to take the extent of homemarket government ownership or control carefully into account.”).

Due to the “absence of the company’s production of the PRC’s

Organic Law of the Village Committee and any agency analysis

thereof” the Coalition II Court remanded the matter to the ITA with

the option to reopen the record for submission of the VCL. Id.

Indeed, the Court’s emphasis on the VCL and its ultimate decision

to remand due to the absence thereof, signifies the importance of

the VCL in making a determination of de facto control. Moreover,

that this evidence was deemed necessary for the Court to assess

Commerce’s finding of control provides additional support that

analysis at the village level is not a change in methodology. The

critical difference between Coaltion II and the instant matter is

that the missing “linchpin” to the Court’s analysis, the VCL, is

now present on the record. 

For the foregoing reasons, the Court finds that Commerce did
Court No. 05-00648 Page 22

not change its methodology in determining whether Huanri was

subject to de facto government control. Indeed, as demonstrated in

the Final Results, Verification Report, Issues and Decision

Memorandum and accompanying record information, Commerce reasonably

determined that Huanri did not meet its burden of demonstrating the

absence of de facto control by the Chinese government necessary for

the granting of a separate rate. Because the Court finds that

Commerce did not change its methodology there was no need for the

notice and comment that is precipitated by a change in methodology.

b. Plaintiffs May Not Receive a “Village-Wide” Rather Than

the PRC-Wide Rate Because if the Presumption of State

Control is Not Rebutted, Only the PRC-Wide Rate is

Available. 

Anticipating that this Court might find that Commerce’s de

facto control analysis was not a change in methodology, Plaintiffs

argued in the alternative that it should receive what it calls a

“village-wide” rather than the PRC-wide rate. See Pl.’s Mem. at

35–39. This argument is devoid of support in both fact and law.

As such, the Court finds that Commerce correctly assigned Huanri

the PRC-wide rate because it did not demonstrate an absence of

de facto government control. 

It is Commerce’s long-standing practice to calculate a single

NME-wide rate for those companies that do not qualify for a

separate rate. See e.g., Shandong Huarong v. United States, 27 CIT
Court No. 05-00648 Page 23

1568, 1592, Slip Op. 03-135 at 38 (Oct. 22, 2003) (not published in

the Federal Supplement) ("[W]here an NME exporter fails to either:

(1) rebut the nonmarket economy presumption of state control, or

(2) otherwise cooperate with the investigation by failing to

respond to Commerce's questionnaire for that review, Commerce may

then apply the NME-wide antidumping duty margin to such exporter's

merchandise.") (emphasis added) (internal quotation omitted);

Tapered Roller Bearings and Parts Therof, Finished and Unfinished,

from the People’s Republic of China, 62 Fed. Reg. 61,276 (Dep’t

Commerce Nov. 17, 1997) (final results); Def.’s Br. at 20. Indeed,

the “term nonmarket economy country means any foreign country that

the administering authority determines does not operate on market

principles of cost or pricing structures, so that sales of

merchandise in such country do not reflect the fair value of the

merchandise.” 19 U.S.C. § 1677(18)(A). The statute, however, does

not speak to a market economy village or sub-national form of

government. Accordingly, because Huanri failed to rebut the

nonmarket economy presumption of state control, Commerce correctly

applied the only other rate lawfully available, the PRC-wide

antidumping duty margin.
Court No. 05-00648 Page 24

B. Commerce’s Determination of De Facto State Control is

Supported By Substantial Evidence and Otherwise in

Accordance with Law.

 

Although briefly mentioning the phrase “substantial evidence”

the Plaintiffs do not put forth any argument claiming that

Commerce’s determination itself was not supported by substantial

evidence. See Pl.s’ Mem. at 2 (“[T]he Commerce Department’s

determination in the Final Results constitutes an abuse of

discretion and is not supported by substantial evidence on the

record.”) Contra Def.’s Resp. at 8 (“Commerce’s determination is

supported by substantial evidence and consistent with the agency’s

long-standing appellate court-approved separate rates

methodology.”). Rather, their argument primarily centers upon

whether there was a change in methodology - an argument the Court

has addressed supra. Because Plaintiffs sporadically include the

phrase “substantial evidence” in their briefs, the Court summarily

addresses the issue. As demonstrated supra, Commerce pointed to

substantial record evidence and explained its decision not to grant

Huanri a separate rate. Accordingly, the Court finds that the

determination of de facto state control is supported by substantial

evidence and otherwise in accordance with law.
Court No. 05-00648 Page 25

CONCLUSION 

Based on the foregoing, the Court finds that Commerce properly

applied its long-standing methodology in concluding that Huanri was

not free from de facto state control. The Court further finds that

Commerce’s determination that Huanri did not rebut the presumption

of state control and therefore received the PRC-wide antidumping

duty rate was reasonable, supported by substantial evidence and

otherwise in accordance with law. Accordingly, Commerce’s final

determination is affirmed, and Plaintiffs’ motion for judgment on

the agency record is denied. Judgment shall enter accordingly. 

 /s/ Nicholas Tsoucalas 

NICHOLAS TSOUCALAS 

 SENIOR JUDGE 

Dated: July 5, 2007

New York, NY
UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS

________________________________________

SHANDONG HUANRI (GROUP) GENERAL CO.; :

SHANDONG HUANRI GROUP CO., LTD.; :

and LAIZHOU HUANRI AUTOMOBILE PARTS CO.,: 

LTD. :

:

Plaintiff, : Court No. 05-00648

:

v. :

:

UNITED STATES, :

:

Defendant :

:

:

THE COALITION FOR THE PRESERVATION OF :

AMERICAN BRAKE DRUM AND ROTOR :

AFTERMARKET MANUFACTURERS :

:

Defendant-Intervenor. :

________________________________________:

July 5, 2007

JUDGMENT

Upon consideration of the United States Department of

Commerce’s Brake Rotors from the People’s Republic of China; Final

Results and Partial Rescission of the Seventh Administrative

Review; Final Results of the Eleventh New Shipper Review, 70 Fed.

Reg. 69,937 (Nov. 18, 2005) (“Final Results”), all other papers

filed and proceedings herein, in conformity with the Court’s

opinion in this matter, it is hereby:

ORDERED that the Final Results are affirmed; and it is further

ORDERED that this action is dismissed.

 /s/ Nicholas Tsoucalas 

NICHOLAS TSOUCALAS 

 SENIOR JUDGE