On Friday, the U.S. Court of International Trade (CIT) issued a public version of its opinion upholding the U.S. Department of Commerce’s (Commerce) final results of the fourteenth (14th) administrative review of the antidumping duty order on frozen warmwater shrimp from People’s Republic of China, covering Chinese shrimp imported into the United States between February 1, 2018 and January 31, 2019. In those final results, Commerce determined that Shantou Red Garden Food Processing Co., Ltd. (Red Garden) was not exempt from the antidumping duty order and sold shrimp into the United States market during the review period at less than fair value, with a dumping margin of 58.96 percent.
The opinion, authored by Judge Richard K. Eaton, rejected arguments made by the Chinese exporter and its U.S. importer, Ocean Bistro Corporation, that Commerce was not legally authorized to re-visit the exclusion of Red Garden from the antidumping duty order. The CIT upheld Commerce’s finding that the Red Garden currently operating was not the successor-in-interest of the company previously operating under that name in 2004 and, as such, could not benefit from the prior company’s exclusion. The CIT further upheld Commerce’s determination that the entity that had received the exemption as Red Garden no longer existed.
As explained by the Court, Red Garden had been “established in 2003 as a joint venture between [Shantou Red Garden Foodstuff Co., Ltd.] and a U.S. company called Red Chamber Co.” According to the CIT, Red Chamber owned 51 percent of Red Garden “through its affiliate Aqua Star Imports, Inc. . . .” Shantou Red Garden Foodstuff “was owned by two individuals, i.e., Zheng Chu Ci and Lin Zhi Quan,” while Red Garden had a board of directors with “three members, two of whom (i.e., Min Bing Kou and Min Shin Kou) were appointed by the foreign owner . . .”
In 2007, Red Garden changed its name to Shantou Jin Cheng Food Co., Ltd. before changing the name of the company back to Shantou Red Garden Food Processing Co., Ltd. in 2013. Along with the name change in 2013, “[t]he U.S. owner, Red Chamber Co., ‘withdrew from the [joint venture] and was no longer a shareholder . . . .” Red Garden dissolved its board of directors and, instead, vested its decision-making authority “exclusively in one of the two individual owners” of the company, with the two individual owners being “Zheng Chu Ci, who owned 41 percent, and his wife Shen Rui Jie, who owned 10 percent . . . .”
Comparing the company operating as Red Garden after 2013 to the company that operated under the same name prior to 2007, Commerce identified numerous significant differences indicating that these were not the same entities. For example, when first operating as Red Garden, the company only sold to two customers “both of whom are affiliated with Red Chamber” and “none of” the company’s “sales were made to an unaffiliated customer.” As Shantou Jin Cheng Food Co., Ltd., the company sold shrimp to at least seven customers and “four of the customers were not affiliated with Red Chamber.” The company using the name Red Chamber post-2013 sold to at least 21 customers, where “only one of the customers was affiliated with Red Chamber.”
Evaluating Commerce’s analysis in light of the arguments presented by Red Garden, the CIT explained that it found these challenges “unpersuasive.” The Court expressed support for Commerce’s exercise of discretionary authority and for the determinations made by the agency in calculating a final antidumping duty assessment rate of 58.96 percent.
Submissions to Commerce during the pendency of the administrative proceeding provide some insight into the practical impact of the agency’s action. In particular, the record of the administrative proceeding includes Commerce’s response to an inquiry from a Congressional office regarding Red Garden. Specifically, in a March phone call, a member of Congress expressed concern that a seafood importing company in their district would be required to pay as much as $7 million in antidumping duties if Red Garden was found to be subject to the antidumping duty order. In its written response to the concerns voiced, Commerce explained that it believed the $7 million figure to be “significantly overstated,” as it was likely based upon an assumption that antidumping duties of 112.81 percent would be assessed on imports of shrimp from Red Garden. Using the estimated figure publicly given to Commerce, the final antidumping rate of 58.96 percent implies that the agency’s decision will result in the assessment of $3.6 million in antidumping duties on the importer.
The Court’s opinion upholding Commerce’s action follows two recent CIT decisions that were setbacks for the domestic shrimp industry and represented victories for shrimp importers. In December 2022, the CIT issued an opinion (Slip Op. 22-136) in Z.A. Sea Foods Pvt. Ltd. v. United States, rejecting the arguments made by the Ad Hoc Shrimp Trade Action Committee (AHSTAC) protesting Commerce’s decision to reduce the antidumping duty rate applied to twelve Indian shrimp exporters from 3.06 percent to 1.73 percent. AHSTAC has since appealed this decision to the U.S. Court of Appeals for the Federal Circuit, with that appeal pending. Separately, in April 2023, the CIT issued an opinion (Slip Op. 23-61) in Ad Hoc Shrimp Trade Enforcement Committee v. United States rejecting the determination of U.S. Customs and Border Protection that the Vietnamese shrimp exporter Minh Phu Seafood and its U.S. importer, MSeafood, had engaged in evasion of the antidumping duty order on Indian shrimp by exporting Indian-origin shrimp to the United States market claimed to be a product of Vietnam.
Read the CIT’s decision in Shantou Red Garden Food Processing Co., Ltd. v. United States (Slip Op. 23-72, May 12, 2023) here: https://www.cit.uscourts.gov/sites/cit/files/23-72.pdf
Read the CIT’s decision in Z.A. Sea Foods Pvt. Ltd. v. United States (Slip Op. 22-136, Dec. 6, 2022) here: https://www.cit.uscourts.gov/sites/cit/files/22-136.pdf
Read the CIT’s decision in Ad Hoc Shrimp Trade Enforcement Committee v. United States (Slip Op. 23-61, Apr. 26, 2023) here: https://www.cit.uscourts.gov/sites/cit/files/23-61.pdf