CIT Upholds AFA on China's EBCP for Exporter's Failure to Submit Non-Use Certifications

The Commerce Department properly used adverse facts available for countervailing duty respondents' alleged use of China's Export Buyer's Credit Program, the Court of International Trade held in a Dec. 8 opinion made public Dec. 16. Judge Timothy Reif penned the trade court's second opinion upholding the use of AFA for the EBCP after a string of court decisions rejected the use of AFA for the program. The judge held that certain information that Commerce was not given by the Chinese government was critical to verifying non-use of the EBCP, given that the respondents' customers failed to submit non-use certifications.

The case comes from the 2017 administrative review of the countervailing duty order on passenger vehicle and light truck tires from China, in which Cooper (Kunshan) Tire Co. and Shandong Longyue Rubber Co. served as the two mandatory respondents. As it had done many other times, Commerce applied AFA to the respondents for allegedly benefiting from the EBCP. In particular, Commerce found that the Chinese government failed to provide certain information on how the program works so that the agency could verify that the respondents didn't use the program.

Commerce wanted to know about a supposed loan threshold the Chinese government put in place in 2013, set at $2 million, and the precise banks that participate in the program. Determining that the Chinese government's answers, to the extent there were any, were unsatisfactory, Commerce then applied AFA to the respondents for the lack of cooperation from the Chinese government. Reif has previously likened the practice and associated litigation to the film Groundhog Day, and attempted to end it by issuing lengthy remand instructions in a similar case (see 2105270080).

In that instance, Commerce actually stuck with its application of AFA relating to the EBCP rather than reversing course as it has done in most other cases (see 2109090069). Reif requested even more information from Commerce in the present case, requesting that the agency give a reason why one of the respondents' questionnaire responses, for instance, are unverifiable by describing step-by-step Commerce's methodology for verifying non-use (see 2110120073). Returning with answers to all of the judge's questions, the agency stuck by its decision to use AFA over the Chinese government's failure to offer information on the program.

This time, the answers were to the judge's satisfaction. Reif first looked at whether the loan threshold information was needed to verify non-use of the program. In the case's first opinion, the court said Commerce failed to give a reason why the threshold information was needed. On remand, it gave three: if the threshold remains in place, it limits the number of possibly relevant loans; if it's not in place, the agency will have a harder time verifying EBCP loans; and if the threshold is no longer at $2 million, Commerce could mistakenly limit its verification.

Reif found that justified the use of AFA for Longyue but not Cooper Tire since the latter only had one customer, so "the need for the threshold requirement to limit appropriately Commerce's inquiry would not appear to be necessary," the judge said.

However, Reif said that the information on participating banks supported the use of AFA. "The court agrees with Commerce’s assertion on remand that its explanation as to the necessity of partner and correspondent bank information supports Commerce’s application of AFA irrespective of the necessity of the threshold information," the opinion said.

During the case, the plaintiffs brought up a case in which Commerce verified the non-use of the EBCP solely with submissions from the respondents. The case, involving mobile access equipment from China, had Commerce say it didn't need the information from the Chinese government since the respondents' customers submitted non-use certifications (see 2110140053). However, Commerce differentiated that case from the present action on the grounds that Cooper Tire and Longyue did not submit these certifications from their U.S. customers.

"[Mobile access equipment] from China is inapposite because in this case, unlike in that case, there were no customer certifications on the record, thereby giving Commerce ‘no indication that [the customers] would participate in verification,'" the opinion said. "… By contrast, in this case, neither respondent provided signed customer certifications of non-use, and neither respondent actually stated that their customers did not use the EBCP." Reif also held that the statute does not require that Commerce ask the respondents for supplemental information in the face of the Chinese government's noncooperation.

(Cooper (Kunshan) Tire Co. v. United States, Slip Op. 22-137, CIT Consol. #20-00113, dated 12/8/22, Judge Timothy Reif. Attorneys: Daniel Cannistra of Crowell & Moring for plaintiffs Cooper Tire and Cooper Tire & Rubber Co.; Jordan Kahn of Grunfeld Desiderio for consolidated plaintiff Vogue Tyre & Rubber co.; Nicholas Sparks of Hogan Lovells for plaintiff-intervenor ITG Voma Corp.; Sosun Bae for defendant U.S. government; Nicholas Birch of Schagrin Associates for defendant-intervenor the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO, CLC)