AFA Rate Higher Than Warranted and Inaccurate, Pasta Exporter Argues

Even if adverse facts available were warranted for the calculation of an exporter’s rate, that rate should be set only to deter non-cooperation, not to destroy a company entirely, the exporter said Feb. 28 at the Court of International Trade (Pastificio Gentile S.r.l. v. U.S., CIT # 24-00037).

The exporter also argued that the AFA countervailing duty rate it received double-counted contradictory subsidy programs and made other impossible leaps.

In its Feb. 28 complaint, Pastificio Gentile said it was contesting a 2021 CVD administrative review on certain pasta from Italy that calculated an 88.67% AFA rate for the company, a mandatory respondent. Gentile had received an initial 1.79% CVD in the preliminary results of the review, but Commerce hiked that number sharply after finding in the final results that Gentile had withheld information.

The 88.67% rate was far too high even if the court upheld the use of AFA, the pasta company said. AFA is intended to deter non-cooperation, not “damage or destroy a company by application of excessive tariffs,” it said.

“The rate applied in this review is excessive and is not reasonably reflective of the rate that would have applied (1.79%) plus a reasonable amount for deterrence to ensure compliance,” it said.

Gentile also argued the department must still perform accurate calculations even when applying AFA. But the AFA rate Commerce assessed for the exporter included contradictory programs that “cannot exist at the same time,” as well as several tax programs which, when combined, “exceed the total potential tax liability,” it said.

And one program, the IRAP -- an Italian regional tax levied on productive activities -- had changed prior to the period of review, Gentile said. Only the part of the program that Commerce had previously not found to be countervailable remained, it said, and shouldn't have been included in the exporter’s rate calculation.

However, use of AFA in this case wasn't supported by facts, the company said, because “the information purportedly withheld was minor in nature, had no impact on the calculation of the margin, and thus no important information was withheld.”

Commerce would have realized this if it had not ended its verification of the exporter early, it said.

“Had the Department completed the verification, the Department would have been able to confirm the important fact -- that Gentile had properly provided a questionnaire response for all of the relevant entities and that none of the purportedly missing data was ultimately required.”