Trade Court Tells Commerce to Attempt Verification of Exporter's Nonuse of China's EBCP

The Court of International Trade on Aug. 16 said it's unreasonable for the Commerce Department not to attempt verification of an exporter's certificates proclaiming nonuse of China's Export Buyer's Credit Program, despite the exporter not having submitted such certificates for all its customers.

Judge Jane Restani remanded the 2020 review of the countervailing duty order on solar cells from China so that Commerce could attempt verification of exporter Risen Energy Co.'s non-use certificates, which the company submitted for all but one of its U.S. customers. Using adverse facts available for all Risen's sales based on the company's "inability to account for a sliver of them," is unreasonable and mistakes the "nature of AFA in the EBCP context," the judge said.

AFA isn't meant to "punish non-cooperative parties," the decision said.

In the present review and in many previous reviews, the Chinese government failed to offer information about the EBCP, including a list of banks China's Export-Import Bank uses to enact the program. Commerce said this failure left a gap on the record, despite efforts from Risen to verify that its U.S. customers didn't use the program. The exporter claimed that the Chinese government gave enough information on the program that no gap truly exists and that, even if there is a gap, the exporter filled it.

Restani opened the discussion of the case by finding that there truly was a gap in the record, noting that the court has previously found reasonable Commerce's position that a gap exists because it doesn't have a list of "partner banks participating in the EBCP." The judge then said Risen failed to fully fill the gap because it didn't provide nonuse certificates for one of its customers, even though this customer only accounted for 2% of Risen's sales. The customer didn't submit the certificate due to an "unrelated business dispute" with Risen.

The judge said the contract with the U.S. buyer itself isn't enough to qualify as a stand-in for the nonuse certificate. Without the certificate, "no statement that the customer did not use the program exists for Commerce to verify," the opinion said.

The court said that while Commerce failed to notify Risen that its "incomplete collection of non-use certificates was a deficient response," such an error was harmless. The exporter "has given no indication that it would be able to remedy this deficiency and has failed to show any ability to remedy it at any subsequent stage of litigation," the decision said.

Where Restani disagreed with Commerce's approach, leading to the remand order, was in the agency's failure to attempt verification of nonuse based solely on its missing certificates from one U.S. buyer. The judge said Commerce can't ignore that Risen has filled large parts of the record.

The government said verification is "futile" because it must be certain Risen didn't receive a benefit from the EBCP -- something it can't do because it doesn't have the full gambit of nonuse certificates. Restani said this belies the agency's own understanding of how the EBCP works. The program provides individual U.S. companies with loans to buy Chinese goods, meaning any subsidy Risen received is "tied to its customers' financing."

The U.S. buyers of over 98% of Risen's sales have put their nonuse certifications on the record. "Therefore, even if EBCP funded 100 percent of the non-cooperating party’s sales, 100 percent of two percent of sales does not support an application of a CVD rate that includes EBCP to all of Risen’s product sales," the judge said. "The math does not add up."

Instead, the court ordered Commerce to attempt verification "to determine more accurately what proportion of the sales Risen is able to account for, or it must remove at least the portion of the EBCP rate attributable to the customers demonstrating non-use from the calculation of Risen’s overall CVD rate."

(Risen Energy Co. v. U.S., Slip Op. 24-94, CIT # 23-00153, dated 08/16/24; Judge: Jane Restani; Attorneys: Gregory Menegaz of deKieffer & Horgan for plaintiff Risen Energy Co.; Ravi Soopramanien for defendant U.S. government; Timothy Brightbill of Wiley for defendant-intervenor the American Alliance for Solar Manufacturing)