Commerce Drops Subsidy Finding for China's Export Buyer's Credit Program in CVD Case

Ribbons exporter Yama Ribbons and Bows Co. did not benefit from China's Export Buyer's Credit Program, the Commerce Department said in Aug. 13 remand results filed at the Court of International Trade. Commerce's new determination, filed under respectful protest, led to the reconsideration of its use of adverse facts available in a countervailing duty review and subsequent exclusion of the AFA rate assigned to the EBCP for Yama. Commerce did, however, continue to find that the provision of synthetic yarn and caustic soda for "less than adequate remuneration" did meet the specificity requirement of the law and are deemed countervailable subsidies (Yama Ribbons and Bows Co. v. U.S., CIT #19-00047).

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 AFA rates for EBCP and synthetic yarn and caustic soda subsidies. Commerce found that the government of China did not respond to the best of its ability to the agency's requests for information as to its rationale for applying AFA.

Judge Timothy Stanceu then ruled that Commerce wrongly applied AFA in its EBCP determination (see 2105030040). The judge said that Commerce did not consider record evidence fairly when putting together its findings. For instance, 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.

As a result, Commerce reconsidered then dropped its finding that Yama used the EBCP during the period of review (POR). "Specifically, in accordance with the Court’s remand order, we are relying on Yama and the [government of China]’s statements on the record that none of Yama’s customers used the program during the POR, as well as Yama’s customers’ declarations of non-use to determine that Yama did not use the EBCP during the POR, under respectful protest," Commerce said.

As for the provision of synthetic yarn and caustic soda for less than adequate remuneration (LTAR), Commerce originally said it lacked information from the Chinese government to find whether the prices from the transactions were "significantly distorted" by China's involvement and whether the private companies that supplied Yama with the yarn and caustic soda were "authorities." China didn't fork over the information Commerce wanted, so the agency applied AFA for these subsidies. The court instructed, though, that Commerce should evaluate the "specificity" requirement in the statute, which holds that Commerce must find that these programs benefited a limited or preferred group.

The real questions for compliance with the specificity requirement in this case are whether the synthetic yarn and caustic soda producers are "authorities" under the law, whether the prices of the inputs purchased were sold at LTAR and whether the subsidy provided is limited to an enterprise or industry, Commerce said. Reconsidering the Chinese government's responses, Commerce said that the record is still incomplete on whether the subsidies are specific within the meaning of the statute, prompting the agency to turn to the 2015 New Subsidy Allegations to make the call. With this information, Commerce continued to find that the synthetic yarn and caustic soda subsidies were exactly that.

"Consequently, Commerce finds that the Provision of Synthetic Yarn and Caustic Soda for LTAR programs meet the specificity requirements of the statute," the remand results said. "As a result, despite the GOC’s claims to the contrary, Commerce maintains that these input LTAR subsidies are countervailable subsidies which provided a benefit to Yama during the POR." As such, Commerce continued to include the 10.45% and 0.26% subsidy rates for the synthetic yarn and caustic soda sales, respectively.