Unknown Why DOJ Continues 'Mystifying' Defense of Position on China's EBCP, CVD Respondent Says

The Department of Justice's insistence on defending the Commerce Department's position regarding China's Export Buyer's Credit Program in countervailing duty investigations is "mystifying" seeing as it refuses to appeal the issue after multiple defeats at the Court of International Trade, respondent Both-Well (Taizhou) Steel Fittings Co. said in a Nov. 30 brief (Both-Well (Taizhou) Steel Fittings v. U.S., CIT #21-00166).

The case concerns Commerce's final results of the 2018 administrative review of the countervailing duty order on forged steel fittings from China, in which Both-Well served as a mandatory respondent. Prior to the review, the CVD petitioner alleged that the respondents were benefiting from China's EBCP -- a program wherein China's Export-Import Bank gives loans to U.S. customers to buy Chinese goods. To verify that the respondents' U.S. customers did not use this program, Commerce asked for proof of non-use from the respondents and their customers. They all submitted statements that they did not use the program.

Unsatisfied, Commerce then requested further information from the Chinese government over the nature of the program. Specifically, the agency requested information over an alleged threshold under which loans are not made and the names of banks that participate in the program. When the Chinese government did not provide this information, Commerce hit the respondents with AFA.

Commerce has routinely used the Chinese government's non-compliance as the basis for which it has used AFA, and has routinely seen its position struck down by CIT. However, Commerce recently said in a separate CVD investigation that it was able to verify that the respondents' U.S. customers did not use the program without this requested information (see 2110140053). Nevertheless, DOJ has continued to defend this position in Both-Well's case (see 2111040037), prompting the Nov. 30 reply brief.

Both-Well repeated arguments already made against the EBCP in the brief, including that Commerce, before applying AFA, must show that information is missing on the record due to a party's noncooperation. Commerce must also show that a party has failed to cooperate to the best of its ability, which Both-Well has not done. The company argued that even exceptions to this rule do not apply.

"Here, Both-Well cooperated by attesting that it is not involved with the EBCP and providing customer certifications stating that their customers were not involved in the EBCP," the brief said. "There is no record evidence -- and Defendant cites to none -- suggesting that Both-Well or its customers used this program, and Defendant offers no reason, supported by the record (let alone substantial evidence) to doubt the legitimacy of Both-Well’s statements of non-use or customers’ certifications."