On Remand, Commerce Switches Remaining Positions in Expedited Review of Canadian Lumber

Responding to a trade court remand order (see 2404230031), the Commerce Department said it has reconsidered its decision and chosen to apply the subsidies received by unaffiliated suppliers of lumber to a few expedited Canadian lumber review respondents -- though this ultimately had no effect on those respondents’ countervailing duty rates (Committee Overseeing Action for Lumber International Trade Investigations or Negotiations v. U.S., CIT # 19-00122).

The department also switched from using FY 2014 to FY 2015 tax returns to calculate the benefit an exporter received from a tax credit, resulting in that exporter receiving a de minimis rate.

It said that the relationship between the four unaffiliated Canadian suppliers and two respondents, D&G/Portbec and Rustique, was “a relationship between a producer and its trading company under 19 CFR 351.525(c)” because the respondents conducted either minor or no processing on the lumber before reselling it.

For the cumulation calculation, Commerce said it was using those suppliers’ cash deposit rate from the investigation “in a manner similar to the attribution of a trading company’s subsidies to an unaffiliated producer.”

But this led to no change to the de minimis rate received by D&G/Portbec because it purchased and resold relatively little lumber from those unaffiliated suppliers, the department said.

Meanwhile, Rustique continued to receive a rate above de minimis. Commerce said it continues “to find it appropriate not to assign a combination rate” to the exporter because in “CVD proceedings, we assign cash deposit rates to companies on a ‘producer and/or exporter’ basis, and there is no current cash deposit hierarchy for CVD proceedings, like there is for antidumping duty cases.”

Commerce said it also has reconsidered its decision to use respondent Fontaine’s FY 2014 tax returns instead of their FY 2015 returns to assess the benefit the exporter received from a tax credit. Exporters and the Canadian government argued that the FY 2015 returns should have been used because that was the year to which the credits were applied.

Usually, Commerce determines the date of receipt of a tax benefit “is the date on which a firm knows, definitively, the amount of its tax liability,” it said. In this case, it said, the record wasn’t clear as to when Fontaine did learn, definitively, how much it owed in taxes.

But the Court of International Trade told the department that the relevant inquiry was rather the date on which the entity receiving the tax credit would have otherwise had to pay the tax, “which is usually the day it files its tax return.”

“Pursuant to the CIT’s remand order, Commerce has reconsidered the information on the record and has determined that there is sufficient evidence to find, based on the unique facts of this record, that Fontaine was required to pay, and did pay, its final tax liabilities for FY 2015 by the end of the 2015 calendar year,” the department said.