Judge Reif Likens China's Export Credit Program Issue in AD/CVD Case to Groundhog Day

The Commerce Department should further explain its decision to not verify customer self-certifications establishing non-use of China's Export Buyers Credit Program in a countervailing duty case, finally moving beyond the "endless loop" brought by the issue, Judge Timothy Reif of the Court of International Trade said in a May 26 opinion. In a saga reminiscent of the film Groundhog Day, according to Reif's opinion, the EBCP has been the subject of "intense litigation," prompting Reif to ask for an answer from Commerce for why it refuses to verify the customer self-certifications, leading to the application of adverse facts available for the subject goods relating to the EBCP.

Guizhou Tyre Co. challenged multiple aspects of the final results of the countervailing duty investigation on truck and bus tires from China. In prior cases, when applying AFA for the EBCP based on the Chinese government's failure to cooperate, the court found that Commerce must: (1) "define the gap in the record explaining exactly what information is missing from the record necessary to verify non-use," (2) establish how this withheld information creates the gap in the record by explaining why the information was necessary to verify claims of non-use and (3) show that only the withheld information can fill the gap by explaining why other information is insufficient. CIT has remanded the application of AFA to the EBCP many times, most recently on April 30 when the court explicitly found that the agency should not have applied adverse facts to the program (see 2105030040).

In Guizhou's case, Reif found that Commerce met the first condition but failed to explain the reason the missing information from the Chinese government was critical and establish a reasonable explanation as to why the agency could not verify the information from the respondents' customers. Commerce was after information from China on whether "China Export-Import Bank eliminated the USD 2 million threshold for an applicant to receive the credit and third-party banks were authorized to disburse program credits to respondents’ customers." While bucking the plaintiff's notion that Commerce could have "easily" verified the non-use self-certifications from the respondents, it has failed to "provide a reasonable explanation for its refusal to rely on the customer certifications of non-use."

On remand, Commerce will either have to issue lengthy remand results or simply spurn its use of AFA for the EBCP. Reif said he would like to see Commerce use the remand "finally to move beyond this endless loop by providing a further explanation for its decision to not verify the customer self-certifications and turn to AFA." In addition, Commerce is also instructed to explain its determination regarding the grants presented at verification, explain its decision to not apply a supply ratio to the import duty and ocean freight adjustments, address the issue of quantity of imports in selecting Tier 1 benchmark for synthetic rubber and butadiene, and explain its decision to not assign a combination rate to respondent Jinhaoyang.

Two parts of Commerce's remand results were sustained: the agency's issuance of the CVD Order and its determination to apply AFA to certain previously unreported grants and loans by Guizhou just before and at verification.