Commerce Didn't Discredit Position on EBCP in CVD Review Despite Verifying Nonuse, DOJ Says

The Commerce Department didn't discredit its position on its ability to verify nonuse of China's Export Buyer's Credit Program in a recent countervailing duty review, the Department of Justice told the Court of International Trade in a Dec. 22 brief. Responding to allegations from the lead plaintiff in a case over a CVD review, DOJ said that Commerce was able to verify nonuse -- despite key information from the Chinese government -- in a separate review due to the low number of the respondents' U.S. customers -- something that is not true of the review at issue.

The case stems from the final results of the CVD investigation on truck and bus tires from China in which Guizhou Tyre Co., the lead plaintiff, served as one of the two mandatory respondents. Commerce applied adverse facts available on the respondents' U.S. customers' alleged use of the EBCP -- a program wherein China's Export-Import Bank gives loans to U.S. customers to buy Chinese goods -- because it wasn't able to acquire two key bits of information from the Chinese government. Commerce deemed the information necessary to verify that the respondents' U.S. customers did not use the program. The information is the alleged threshold under which loans are not made and the names of banks that participate in the program.

CIT has repeatedly held that this rationale isn't supported to apply AFA in this circumstance. In the most recent opinion in Guizhou's case, Judge Timothy Reif requested Commerce answer a litany of questions about why the requested information is essential for verifying nonuse. The judge referenced the movie "Groundhog Day," referring to the cyclical nature of this issue (see 2105270080). Commerce answered Reif's questions, attempting to get the court to sustain its use of AFA in this instance (see 2109090069).

In a separate CVD investigation into mobile access equipment (MAE) and subassemblies from China, Commerce said it was able to verify nonuse of the program without the requested information from the Chinese government (see 2110140053). Guizhou used this development to argue that Commerce undercut its supposition that the agency would not be able to verify nonuse without the requested information (see 2110290063).

Commerce said Guizhou's comparison between the two reviews "grossly oversimplifies" the difficulties Commerce faces. The agency was still trying to find a way to move forward with the EBCP in the face of the trade court's multiple decisions striking down its use of AFA during the MAE investigation, and the result was the final determination in which Commerce attempted to find a way to find, "based on facts available," whether a company used the program, the brief said. "The use of this questionnaire does not invalidate or otherwise eliminate the numerous difficulties that Commerce still faces in investigating the EBCP and explained in detail in its remand redetermination here," DOJ said.

The government then went on to point out the differences between the MAE review and the review at issue in Guizhou's case. In the MAE review, Commerce was dealing with a very limited number of U.S. customers, making the verification of nonuse feasible, the U.S. said. In Guizhou's case, though, there were over 140 customers during the period of review, making verification nearly impossible within the statutory timelines. "What may be workable in administrative reviews with very small numbers of U.S. customers is not a one-size-fits-all approach," DOJ said. "... Sending questionnaires to over 140 customers requesting documentation for every loan those customers received during the period of investigation, reviewing each and every loan for those 140 customers, and filtering out which loans may have been dispersed under the EBCP would be virtually impossible to complete within the statutory deadline."

Guizhou further tried to argue that Commerce could reduce the number-of-customers problem by using sampling or "spot-checking" of a slice of a respondent's U.S. customers. However, this runs into the same problem as before in that the Chinese government has not given the information needed to differentiate an EBCP loan from a normal one, the brief said. "If Commerce attempted to sample or 'spot-check' as [Guizhou] proposes, Commerce would need to resort to randomly selecting a few of the respondent’s customers and review that customer’s information with no meaningful guidance as to how the EBCP operates."