CIT Finds Commerce Wrongly Applied AFA on China's Export Buyer's Credit Program in CVD Case

The Court of International Trade ruled that the Commerce Department improperly applied adverse facts available to Chinese ribbon exporter Yama Ribbons and Bows Co. in a countervailing duty administrative review. In an April 30 opinion, Judge Timothy Stanceu found that Commerce did not consider record evidence fairly when determining whether Yama received a subsidy from the Export Buyer's Credit Program from the Export-Import Bank of China. Remanding the case, Stanceu also held that Commerce failed again to consider all relevant record evidence in its decision to include subsidy rates to inputs of synthetic yarn and caustic soda in the CVD review.

In 2017, Yama was subject to a countervailing duty administrative review on narrow woven ribbons with woven selvedge from China for entries in 2016. Commerce included 16 different subsidy programs that Yama allegedly benefited from, resulting in a final CVD rate of 23.70%. Yama contested Commerce's determinations of some of the subsidies, including the agency's findings that Yama benefited from the EBCP and received subsidies for inputs of synthetic yarn and caustic soda. Both of these subsidy determinations were the result of Commerce's application of adverse facts available, finding that the government of China did not respond to the best of its ability to Commerce requests for information.

Commerce's application of AFA to Yama came even though Yama fully participated in the proceedings. To defend this position, Commerce relied on a U.S. Court of Appeals for the Federal Circuit opinion, involving Fine Furniture, which found that Commerce may use AFA in a CVD proceeding in response to non-cooperation by a national government. Stanceu ruled that the facts of the CAFC case do not apply to this case since the record contained evidence supporting a finding that Yama did not benefit from the EBCP.

“According to record evidence, Commerce erred ... in concluding that it lacked requested information comprised of 'a list of all third-party banks involved in the disbursement/settlement of export buyer’s credits, and a list of all partner/correspondent banks involved in disbursement of funds under this program,'” Stanceu said. According to evidence on the record, Commerce knew that only the Ex-Im Bank disbursed EBCP funds and not private banks, and also that Commerce did not ask the Chinese government for a list of banks involved in the settlement of funds. In essence, Commerce cannot apply AFA for information it never requested, CIT said. Commerce also claimed to not have an understanding of how the export program works. Stanceu said that this position is unsupported by record evidence and statements from the Chinese government itself stating that there was no evidence to support a finding that any U.S. customer of Yama used the EBCP.

(Yama Ribbons and Bows Co. v. U.S., Slip Op. 21-50, CIT # 19-00047, dated April 30, Judge Stanceu. Attorneys: John Kenkel of deKieffer & Horgan for plaintiff Yama Ribbons and Bows Co., Ltd.; Kara Westercamp for defendant U.S. government; Gregory Dorris of Pepper Hamilton for defendant-intervenor Berwick Offray LLC.)