Commerce Pushes Use of AFA Against Noncooperative Unaffiliated Suppliers

The Commerce Department reversed its use of adverse facts available against an Indian exporter of welded carbon steel standard pipes and tubes but said it was “concerned” that use of unaffiliated, noncooperative suppliers could provide otherwise-cooperative review respondents a “cloak of invisibility” (Garg Tube Export v. U.S., CIT # 21-00169).

“Because Commerce lacks subpoena power, Commerce’s ability to apply AFA is an important one,” it said.

The department, “under respectful protest,” found after a second remand of administrative review results (see 2404160037 and 2110220069) that it was “unable to demonstrate on the record of this review that [exporter] Garg Tube failed to cooperate to the best of its ability” or that the exporter had enough leverage against its unaffiliated suppliers to force them to participate. Instead Commerce chose to use other available facts without an adverse inference for supplier’s cost figures, looking to the exporter’s acquisition costs. As a result, Garg Tube came out with a 4.2% AD instead of a 13.9% rate.

Garg had clearly sought to be as cooperative as it could, the department noted. As the Court of International Trade had indicated, the exporter “attempted on several occasions” to convince a supplier to respond, even “threatening the future of the business relationship,” it said.

However, Commerce called that conclusion “limited” because it relied only on record evidence, which was lacking “precisely” due to the supplier’s noncooperation.

“Because [the supplier] refused to cooperate in the underlying administrative review, Commerce could not obtain complete information necessary to fully assess Garg Tube’s ability to induce [the supplier]’s cooperation (or [the supplier]’s possible motives in declining to provide the requested [cost of production] information),” Commerce said.

The department said it was “concerned with certain implications of the CIT’s opinion” for exactly that reason. AFA remedies evasion and incentivizes cooperation with Commerce’s inquiries, even when application of it “collaterally impacts a cooperative mandatory respondent,” the department said.

It noted it was "troubling" that this was the second time it had individually examined Garg Tube and been unable to access its supplier’s cost data. But it acknowledged that the current review was initiated before the final results of the previous one were released, so Garg Tube hadn’t had time to “follow through on its threat to cease its business relationship with” an "uncooperative supplier."

Garg Tube -- and respondents generally -- have “no incentive” to ensure Commerce receives information from unaffiliated entities that would lead it to calculate an accurate dumping margin, it said. Application of AFA would provide that incentive; for example, Garg Tube could change the way it does business by “removing the uncooperative suppliers from its list of suppliers” or by “obtaining the requested information at the time the respondent agreed to purchase subject merchandise.”

“A respondent’s significant and continued use of non-cooperative suppliers effectively provides a cloak of invisibility which may shield the suppliers unfair pricing behavior for subject merchandise sold in the U.S. market,” the department said.