Commerce Asks for Remand at CIT Due to 'Refined' Practice Regarding China's EBCP

The Commerce Department asked the Court of International Trade for a voluntary remand in a countervailing duty case to reconsider its use of an adverse inference against exporter JA Solar Technology Yangzhou Co. related to its alleged use of China's Export Buyer's Credit Program since the agency "refined its practice." In its opposition to JA Solar's and Risen Energy Co.'s motion for judgment in a case on an administrative review on solar cells from China, the U.S. said it altered its handling of verifying non-use of the EBCP to only require non-use certifications from all U.S. importers and not all downstream U.S. customers (Risen Energy Co. v. United States, CIT # 22-00231).

In the review, JA Solar submitted non-use certifications from its sole U.S. importer, its affiliated reseller, though it did not submit these certifications for all its downstream U.S. customers, leading to the initial application of adverse facts available by Commerce. The agency said it changed its practice in its remand results in a suit on the 2017 review of the CVD order, "which postdates Commerce's final results in this case by several months." In that review, the agency said JA Solar did not use the EBCP based on similar evidence.

JA Solar's fellow respondent in the review, Risen, was not so lucky. The government argued in the brief that the use of an AFA was warranted for Risen since the company did not submit non-use certifications for one of its U.S. importers. Saying Risen did not benefit from the EBCP would require assuming, without evidence, that Risen's non-responding importer did not use the program, the brief said.

The U.S. also argued benefits received by Risen's cross-owned firm, Risen Ningbo Electric Power Development Co., under Article 26(2) of China's Enterprise Income Tax Law were properly found to be de jure specific. The benefits were referred to by Risen as "[i]ncome tax preference for dividends, bonuses and other equity investment income between eligible resident companies.” Commerce said the tax exemptions are specific since they are limited to "enterprises with gains from direct investments in qualified resident enterprises," with certain exclusions, and that they benefit Risen and JA Solar.

The government said the specificity finding comports with the statute's definition of de jure specificity since the program "is limited to resident enterprises with income from investments in other resident enterprises, and excludes enterprises with income from such investments held for less than 12 consecutive months." Commerce added that the program provides a financial contribution that benefits JA Solar as well since "it constitutes revenue foregone by the government of China, whereas JA Solar’s arguments about the program’s alleged purpose of avoiding double taxation are inapposite because Commerce is not required to consider the subsidy’s effects in determining that it exists."