Court Opinion

ID: 9491508
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:16:08.256969+00
Date Added: 2024-06-11T17:54:47.218870
License: Public Domain

PLAGER, Circuit Judge,
concurring in part and dissenting in part.
I believe the approach that Commerce has taken in these cases regarding the application of countervailing duties to foreign privatizations is wrong, wrong both as a matter of statutory construction and as a matter of United States economic policy. The panel majority, citing its earlier opinion in Saarstahl AG v. United States, 78 F.3d 1539 (Fed.Cir.1996) (“Saarstahl II”), reverses the Court of International Trade, and supports Commerce’s position largely as a matter of deference to the agency.
Amidst the welter of agency determinations, remands, prior reversals and earlier opinions in this case, it is easy to lose sight of the big picture. The big picture is simply this: “the purpose of the countervailing duty law is ‘to offset the unfair competitive advan*1376tage that foreign producers would otherwise enjoy from export subsidies paid by their governments.’” Saarstahl II, 78 F.3d at 1547 (Plager, J., dissenting) (quoting Zenith Radio Corp. v. United States, 437 U.S. 443, 98 S.Ct. 2441, 57 L.Ed.2d 337 (1978)). The purpose is to ensure that products entering United States markets are not benefited by government subsidies. By increasing the market price of imported goods, countervailing duties help to ensure that competition in the American marketplace is fair. It makes little sense to use the countervailing duty law to punish foreign producers or foreign governments for past governmental errors involving subsidization of the means of production, unrelated to current imports or current markets.
If a previously subsidized government asset, such as a manufacturing plant, is sold to a private producer in an aim’s length transaction for fair market value, the future products produced at the plant and imported into the United States by the private producer are no more “subsidized” than if the plant had been purchased from a private seller. If the plant is purchased from a private seller at fair market value, there of course would be no countervailing duty. When the plant is purchased from a seller who previously received government subsidies, but is purchased in an arms length transaction for fair market value, the future products produced therein and exported to the United States in competition with American products are in no sense “subsidized” simply because of the way in which the asset was originally created. The private producer who purchases the plant pays the same price regardless of who the seller is. Thus there is no basis for imposing a countervailing duty on newly-imported products based on the origin of the plant.
Obviously, a key consideration is a determination of whether the sale of the government asset to the private producer somehow carries with it a financial benefit to that producer, one that will affect future production, that a free market economy would not have granted. In the case at bar, Commerce specifically found that the asset sale was at fair market value, in an arms length transaction. The Court of International Trade had correctly concluded that, in such circumstances, the arbitrary imposition of a countervailing duty on the importation of future production was not within the statutory authority of the agency.
The panel majority explains Commerce’s interpretation of the statute as based on the theory that “[wjhen a subsidized company offers a productive unit for sale, the offer includes (1) an asset — the productive unit— and (2) a liability — an obligation to pay countervailing duties.” See slip op. at 1374. If by “productive unit” is meant ownership of an intangible, a corporate entity with assets and liabilities, and those liabilities include the burden of prior subsidization, then obviously those liabilities are now the responsibility of the new owner, and Commerce can take that into account in some fashion. But if, as here, “productive unit” means a specific physical asset such as a steel plant, such an asset has only value, a market price. When that price is paid in an arms length transaction by a new owner, it is difficult to understand why future production by the new owner would carry the burden of the prior subsidization. (I suppose it is possible that there are prior assessed duties for past imports, still owed by the corporate entity, but that is a matter of debt collection, not countervailing duties against a new producer, and nothing in the record before us suggests that is at issue.)
The panel majority is concerned that if a subsidized foreign company could sell its assets free from liability for future countervailing duties, then foreign government privatization would take that course. See id. at 1374-75. We would be left with virtually empty, non-operating government-corporate shells no longer subject to the imposition of United States countervailing duties. See id. Again, assuming the problem is not one of past debt collection, I can only respond, Hooray !! That is the whole point of the effort to encourage foreign governments to cease engaging in subsidized production, which subsidization made products liable to countervail*1377ing duties upon importation into this country. By selling off their assets to private enterprise, these government-subsidized producers put themselves out of business. When the purchase of those assets imposes the same capital burdens on new private producers as any other privately-created assets would, we end up with products that can fairly compete in open markets, and governments that stay out of the marketplace.
The purpose of the countervailing duty law is not to punish previous subsidization, but to support free and open competition. The statute does not dictate how that is to be done in the context of these privatization cases. The approach taken by Commerce, and now approved by this court and made applicable to all cases of this class, is counterproductive to that purpose because it punishes efforts at privatization when there is no evidence that future production resulting from the privatization of those assets is in any way anti-competitive or unfair to American producers.
Countervailing duty cases present Commerce with the difficult task of applying an elaborate statutory scheme to complex factual matters involving international business practices. The agency is charged with the duty of protecting American business from unfair competition from abroad; it is understandable that interested domestic enterprises may urge Commerce to pursue its mission with zeal. The agency, with the benefit of a large staff, has developed a degree of expertise in these matters which entitles it to a certain amount of deference in its handling of the issues with which it is charged.
Yet, Congress chose to make the agency’s decisions subject to judicial review, first in a trial court which itself has expertise in these matters, and then in a court of appeals. Though appellate judges have neither technical expertise nor large staffs, it is our duty to make an independent assessment of the correctness of the agency’s understanding of the law, and its application to the particular ease before it.
In this case, two of the four judges who put their minds to it — the trial judge and I— believe that Commerce misunderstood its Congressional mandate, and thus misapplied the law to these facts. My two colleagues disagree, and so the case is decided. Because of its significance to United States policy with regard to foreign governments and our efforts to promote free market economies world-wide, I have written separately.
In sum, I concur in the result reached by the majority only to the extent that it is consistent with, and perhaps driven by, the majority opinion in Saarstahl II, and thus arguably controlled by our precedent. See also British Steel PLC v. United States, 127 F.3d 1471 (Fed.Cir.1997). (But see my dissent in Saarstahl II, 78 F.3d at 1546, noting that both parties sought remand and the court reached issues that neither party wished to have addressed. See also Inland Steel Bar Co. v. United States, 86 F.3d 1174, 1996 WL 168937, at *1 (Fed.Cir.1996) (Plager, J., dissenting) (nonpreeedential).) Absent an in banc reversal by this court, it may take attention by the Supreme Court, or eventually Congress, before the matter can be set straight.
I otherwise dissent on the basis of my dissent in Saarstahl II. On the record before us, I would affirm the decision of the Court of International Trade.