Various Factors to Weigh in Decision Over Whether to Appeal CIT Ruling Upholding AFA Over China's EBCP

When the Court of International Trade on Sept. 13 ruled that the Commerce Department could use adverse facts available for use of China's Export Buyer's Credit Program, an appeal of the matter seemed inevitable. The trade court had issued a string of opinions rejecting Commerce's ability to use AFA in this way, and the U.S. had refused to appeal, leading to the issue floating in legal limbo given CIT's lack of power to issue a precedential opinion. Judge M. Miller Baker's opinion upholding use of AFA put the power to appeal in the hands of the countervailing duty respondents (see 2209140029). While an appeal may seem straightforward, other concerns cloud the prospect.

For one, the plaintiff in the case might not want to risk a ruling from the U.S. Court of Appeals for the Federal Circuit that finds that Commerce is justified in using AFA over the EBCP, despite the string of CIT opinions finding the opposite, a lawyer affiliated with CVD petitioners told Trade Law Daily. The issue over how much to defer to Commerce over highly technical questions such as how to verify the EBCP differs from judge to judge, so this consideration will add to the appeal calculation. Instead of seeking the finality of the Federal Circuit, the plaintiff could feel more comfortable appealing to CIT every time and find more certainty that the use of AFA will be remanded. The facts of the case also matter, the lawyer said, since the respondent must feel confident that it's and its U.S. customers' attempts at proving non-use administratively are strong.

However, the lawyer said that an appeal would not be surprising. An attorney affiliated with CVD respondents found the prospect of an appeal a more likely event, arguing that the judge's standard in the case was a faulty one and the likelihood of appeal strong.

The petition underlying the case argued that respondent Fujian Yinfeng Imp & Exp Trading benefitted from the EBCP -- a program wherein China's Export-Import Bank gives U.S. buyers funds to purchase Chinese-made goods. To verify whether Yinfeng and its customers used the EBCP, Commerce requested two pieces of information from the Chinese government: a threshold over which loans are made under the program and which banks participate with China's Ex-Im Bank to issue the loans.

When the Chinese government failed to provide the information, Commerce hit Yinfeng with AFA -- a move the trade court has repeatedly struck down in the past. The agency has repeatedly argued that this information is needed to verify non-use of the program -- a position Commerce has continued to hold even when it has verified non-use administratively without the Chinese government's participation. This raises the question of whether there was any underlying difference between Yinfeng's case and the prior matters which rejected the use of AFA for the EBCP.

The CVD respondent-affiliated lawyer said that rather than needing this information, the use of AFA is simply a way to punish China for failing to respond. "I frankly think that Commerce’s obsession with obtaining data from the GOC has very little to do with verifying non-use, but is instead driven by Commerce’s pique at being stiffed by the Government of China," the lawyer said. "Commerce’s decision-makers don’t like this non-cooperation by the GOC and want to punish it for its own sake. They can’t abide by the GOC refusing to cooperate and not paying a price for that decision. That’s what this is all about."

A CVD petitioner-affiliated lawyer agreed, but for different reasons. "Regardless of whether you verify or don’t verify, there has to be a way for Commerce to get the government of China to participate in these cases as it’s required to in U.S. law and international law," the attorney said. "So we can’t just give a pass to the government of China, and say sometimes that we can verify non-use, that’s OK, but if the government is not cooperating, Commerce has to take action. It’s not a tenable position long-term to say that we’re sort of OK with the government of China stonewalling, and you see that in the opinion as well."

Andy Schutz, partner at Grunfeld Desiderio, added that what shades the use of AFA in this way even further is that Commerce has never actually proved that a CVD respondent's U.S. customers have ever used the EBCP. "That’s the crazy thing to me," Schutz said. 'It’s not like we have petitioners coming in and saying, 'We have a bunch of U.S. companies using this program.' No one’s ever submitted anything to prove it, ever in the 10 years this program has been alleged in China CVD cases. That’s crazy."

Schutz is confident that Commerce's actions here will finally have their day in court at the Federal Circuit. "Finally, we’ll get an appeal," he said.