Commerce Verifies Non-Use of China's EBCP Using US Customers' Data in CVD Case at Trade Court

The Commerce Department verified that countervailing duty respondent Both-Well (Taizhou) Steel Fittings Co. and its U.S. customers did not benefit from China's Export Buyer's Credit Program (EBCP), in remand results submitted to the Court of International Trade on July 8. However, Commerce said that it still believes that the use of adverse facts available over the program is warranted since the Chinese government did not provide the requested information supposedly needed for a full analysis of whether the respondent and its U.S. customers benefitted from the EBCP (Both-Well (Taizhou) Steel Fittings Co. v. United States, CIT Consol. #21-00166).

The case concerns the first administrative review of the CVD order on forged steel fittings from China. In the review, it was alleged that Both-Well benefited from China's EBCP, wherein China's Export-Import Bank pays U.S. customers to buy Chinese exports. Finding that it wasn't well equipped to certify whether the respondent benefited from this program, Commerce then asked the Chinese government for two pieces of information the agency deemed essential to understanding how the program works, allowing it to verify non-use: third-party banks that cooperate with the program and reforms made to the program by the Chinese government.

The Chinese government did not provide the information, resulting in Commerce hitting Both-Well with an AFA rate for the use of the EBCP. The trade court already has repeatedly ruled against the practice in other reviews, with Commerce refusing to appeal to the U.S. Court of Appeals for the Federal Circuit. This time around was no different. Judge Claire Kelly said that the use of AFA was not warranted since Commerce failed to show why the information requested of the Chinese government was necessary to verify non-use in light of the certifications of non-use submitted by Both-Well (see 2202080035).

The judge recommended that Commerce ask Both-Well's U.S. customers for details of how they certified non-use of the EBCP. On remand, the agency did just that, receiving verification submissions from the customers showing that they didn't use the program. The evidence included "complete audited financial statements, general ledgers, trial balances, charts of accounts, loan documentation including details of the loan specifics and purpose, as well as screen shots from the customers’ accounting systems." Commerce said there was no evidence that the companies used the EBCP.

The result, if sustained, would be a CVD rate decrease for Both-Well from 25.90% to 15.36%, even though the agency still thinks that AFA is warranted because of the Chinese government's refusal to turn over the requested information.