Commerce Removes EBCP and Article 26 Tax Program From Chinese Exporters' CVD Rates

The Commerce Department is set to lower the countervailing duty for two Chinese solar cell exporters, removing adverse facts available rates for certain programs and changing several cost calculation methods, it said in remand results filed with the Court of International Trade (Risen Energy Co. v. U.S., CIT # 22-00231).

Under protest, Commerce removed China’s Export Buyers’ Credit Program and another Chinese tax program from its analysis of CVD rates for Chinese exporters Risen Energy Co. and JA Solar. It also switched its surrogate country choice to Malaysia for the less-than-adequate remuneration calculation and changed its methods for establishing benchmark prices for ocean freight.

The U.S. asked for the remand in September amid a 2022 case brought by Risen and JA Solar contesting Commerce’s 2019 administrative review of the CVD order on their products, for which the two were mandatory respondents. In its request, the U.S. said it wanted to reconsider its benchmark price calculations for land and ocean freight for the companies, as its methods had evolved since 2019 (see 2309050036).

Court of International Trade Judge Jane Restani granted the remand, but also ordered Commerce to reconsider its specificity analysis for one Chinese tax program it considered, Article 26 of the country’s Enterprise Income Tax Law, as well as the department’s determination that the exporters used EBCP (see 2310110036).

Commerce made changes on all counts in its remand results.

Commerce removed the Article 26 Tax Program from its subsidy rate for Risen. It did so under protest, disagreeing with the court’s holding that the program was not de jure specific enough to the exporters under consideration.

“We maintain that the Article 26(2) Tax program favors a specific subset of enterprises over others as set forth in law by the Enterprise Income Tax Law of the People’s Republic of China, i.e., ‘resident’ enterprises with investment gains derived from direct investment in another ‘resident’ enterprise excluding ‘investment gains obtained for holding listed and circulating shares issued by a resident enterprise for less than 12 months consecutively,’” it said.

Commerce also removed the AFA rate related to EBCP that it had applied to Risen’s CVD calculation. Again under protest, it said that, because of the court’s order, it hadn't been able to conduct proper “spot checks” on customers of Risen that had submitted non-use certifications because it hadn't been allowed access to enough information from them.

“The Court’s requirement that verification not overly burden participants limits Commerce’s ability to verify such that Commerce may be unable to verify non-use of the EBCP fully and effectively without violating the Court’s order,” it said.

Commerce also changed its methods for setting benchmark prices for land value and ocean freight, as it had sought to do when it requested the remand. To establish its benchmark prices for land value in an LTAR evaluation, it said it relied solely on Malaysian data provided by Risen, saying those prices were “more contemporaneous to those acquisition years” than the Thai data it had previously used.

“We continue to treat the land-use right that was paid via a lump-sum for a duration of more than one year as a non-recurring subsidy, and land-use right that was paid periodically for a duration of one year or less as a recurring subsidy,” it said.

Finally, Commerce changed its method for calculating ocean freight benchmark prices, choosing to rely solely on Xeneta data rather than Descartes data.