Commerce Further Explains AFA Rate for EBCP on Remand at CIT

The Commerce Department stuck by its decision to apply a 10.54% adverse facts available countervailing duty rate to China's Export Buyer's Credit Program for respondent Yama Ribbons. Submitting its remand results to the Court of International Trade Feb. 15, Commerce said the CVD rate "does not unreasonably penalize Yama as a cooperative respondent" and using AFA was warranted given the Chinese government's failure to cooperate in the case (Yama Ribbons and Bows v. United States, CIT # 20-00059).

The case concerns the 2017 administrative review of the countervailing duty order on woven ribbons and woven selvedge from China. In the review, Commerce assigned Yama the 10.54% AFA CVD rate over the EBCP because of the Chinese government's failure to provide two pieces of information about the program that the agency deemed necessary to verifying whether the respondent's U.S. customers used the EBCP.

Despite the trade court having repeatedly held these were not proper grounds to use AFA over the EBCP, Judge Timothy Stanceu in December became the third judge to break with the court's prior rulings (see 2212270028). While the judge upheld the use of AFA in this case, he remanded the rate itself for reconsideration, telling the agency the goal of AFA is not to be punitive but to encourage parties to comply with agency requests to the best of their ability.

Stanceu also took issue with Commerce's methodology for picking the rate, which the agency originally said amounted to using the highest rate from any non-company specific program in any CVD case involving the same country. Using this method, Commerce used the 10.54% rate for preferential lending to the coated paper industry in a different CVD review. The judge said the agency did not explain how this program was thought to be available to the woven ribbons industry in China.

On remand, Commerce further explained its methodology, telling the court it originally incorrectly laid out the steps of its hierarchy for determining AFA raters in CVD proceedings as having only three steps when it really has four. The third step of this hierarchy has Commerce use the highest non-de minimis rate for an identical or similar program in another CVD proceeding involving the same country in cases where there is no non-de minimis rate for the identical program in the same proceeding or no non-de minimis rate for a similar program within the same proceeding. The fourth step of this hierarchy sees Commerce use the "highest calculated rate for any program from the same country that the industry subject to the review could have used."

The agency said it set the 10.54% rate under the third step of this hierarchy. The fourth step is the only step that requires Commerce to use a program available to the subject industry. "Therefore, because we did not select the 10.54 percent rate pursuant to the fourth step of the hierarchy, Commerce has not considered whether this program is available to the narrow woven ribbons with woven selvedge (narrow woven ribbons) industry in China," the remand submission said.

Commerce also explained it does not see the rate as punishing the respondent. Citing the U.S. Court of Appeals for the Federal Circuit's ruling in Fine Furniture v. U.S., the agency said the Chinese government's failure to cooperate is a "legitimate basis to apply an adverse rate that, nonetheless, affects a cooperating respondent."