Trade Court Says Commerce's Analysis on China's EBCP 'Critically Flawed'

The Commerce Department's use of an adverse inference against exporter Yama Ribbons and Bows Co. for its supposed benefit from China's Export Buyer's Credit Program was "critically flawed," the Court of International Trade ruled on Aug. 25. Judge Timothy Stanceu, remanding the 2018 review of the countervailing duty order on woven ribbon from China, said that Commerce based its use of adverse facts available on "missing" information from the Chinese government that the agency never actually requested. The judge added that submissions from the Chinese state, along with Yama itself, stand as enough to refute any finding that the exporter benefitted from the EBCP.

Stanceu also sent back Commerce's finding that Yama benefited from the provision of synthetic yarn and caustic soda for less than adequate remuneration, per the agency's request. Commerce said it forgot to add the document serving as the basis for its finding, the new subsidy allegation in the petition, to the record. While Stanceu let the agency reopen the record, he didn't agree with Commerce's bid for a "piecemeal approach" to litigation, whereby the U.S. would have Commerce only look to the specificity question and deny Yama's challenge in all other respects.

To avoid this, Stanceu will let Commerce reopen the record to add the allegation from the 2015 portion of the review, while also permitting the exporter to "submit comments to it that address this new information." To avoid the piecemeal approach, "Commerce shall reconsider its LTAR determinations for these two inputs, in the entirety, based on the supplemented record and the comments plaintiff submits."

The court's review of the EBCP issue echoed many of its past rulings, which have rejected Commerce's use of AFA based on the Chinese government's refusal to submit certain information on the program itself. Stanceu noted that Commerce in some cases can use AFA on a fully cooperative respondent when the exporting government fails to act to the best of its ability, but it should look to avoid this result if the relevant information exists elsewhere on the record. The judge said this was the case here.

In the review, Yama submitted verification of its customers' non-use of the program, while the Chinese government made similar claims and explained that the EBCP is mainly used for capital goods and high-tech products and services. Woven ribbon isn't the focus of the program.

Commerce ultimately said it couldn't verify the non-use of the program by Yama's U.S. customers since it lacked additional, "unrequested infromation." In the review, the agency initially requested a sample application for the program, along with its approval, and agreement between the customer and the bank establishing the terms of the assistance. Stanceu said that this request was "inapplicable" given that no Yama customer received a credit, and it was invalid since it wasn't repeated in the supplemental questionnaire. As a result, he struck down Commerce's decision to base the adverse inference on this missing data.

The judge added that the determination of a benefit from the EBCP was "unsupported" since the absence of a list of corresponding banks, which the Chinese government refused to provide, didn't affect the agency's ability to determine whether Yama befitted from the program. Commerce admitted this list of banks would have been of "no use" to it absent other information the agency failed to request.

"Commerce illogically reasoned that unless it could verify the non-EBCP origin of all the loans of all the customers, it could not so verify any loan of any customer," the opinion said. "In that respect, the Department’s presumption that no verification was possible amounts, on the record evidence, to unsupported speculation."

(Yama Ribbons and Bows Co. v. United States, Slip Op. 23-127, CIT #21-00402, dated 08/25/23; Judge: Timothy Stanceu; Attorneys: John Kenkel of deKieffer & Horgan for plaintiff Yama Ribbons and Bows; Kara Westercamp for defendant U.S. government)