CVD Petitioner Defends Commerce's Full Explanation for Use of AFA Over China's EBCP

The Commerce Department fully addressed the Court of International Trade's questions about why the agency needs certain information from the Chinese government in order to verify that certain exporters' U.S. customers did not use the Export Buyer's Credit Program, a countervailing duty petitioner argued in May 19 comments supporting Commerce's remand. The petitioner, United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union, AFL-CIO, said that the "only reasonable way" for Commerce to pursue verification of non-use of the EBCP is through this requested information, so the Chinese government not providing it stands as reasonable grounds for the use of adverse facts available (Cooper (Kunshan) Tire Co. v. United States, CIT #20-00113).

The case arises from the 2017 administrative review of the CVD order on passenger vehicle and light truck tires from China. As was its practice, Commerce applied AFA to the respondents when finding they benefitted from the EBCP because the Chinese government failed to provide two key pieces of information on how the program works so that the agency could verify non-use. The requested information concerned a threshold over which loans are made under the program and the banks that participate with China's Export-Import Bank to issue the loans -- so that the agency could verify that the respondents didn't use the program.

In a similar case in front of the same judge, Judge Timothy Reif, the court likened this practice to the film Groundhog Day. Reif issued lengthy remand instructions in the similar case (see 2105270080), but this time sought even more information from Commerce, requesting that the agency give a reason as to why one of the respondents' questionnaire responses, for instance, are unverifiable by describing step-by-step Commerce's methodology for verifying non-use.

Rather than reversing its use of AFA in the face of the judge's criticism, Commerce answered all of Reif's questions (see 2202090069). The agency laid out its step-by-step process to show why respondent Cooper (Kunshan) Tire Co.'s statements couldn't be used. Seeking to help make the case that the use of AFA in this fashion should be upheld, the petitioner chimed in with arguments of its own.

"Commerce has explained the extensive information it would need to collect from third-party customers to attempt such a verification and further explained why even with that information, Commerce would not know what exactly it should be combing through that information to find," the brief said. "Commerce’s decision in this situation is not only fully compliant with statutory requirements on Commerce’s use of AFA, it is the only reasonable way for Commerce to pursue the goals Congress had in granting Commerce the authority to apply AFA and encourage future cooperation."

The petitioner further argued against the plaintiff's claim that Commerce recently was able to verify non-use of the EBCP without the requested information in a different CVD case. The defendant-intervenor said that in that case, Commerce issued supplemental questionnaires in lieu of on-site verification in a way to assuage concerns in other CIT decisions that have prevented the use of AFA over the Chinese government's noncooperation. Commerce, though, was not announcing a change in department policy, the brief said.

"Commerce explained that it was applying the claims of nonuse as the facts available due to the unique situation before it, where it lacked time to conduct a verification of those responses or to request further information," the petitioner said. "Commerce stated that it would have been preferable to have actually verified that information, including the information from the customers, as even the supplemental questionnaires did not provide the full information it would need to be assured of nonuse in fact. It was only given the time constraints it faced that Commerce found it reasonable to use the still limited facts it had on that record."