Commerce Properly Dropped Use of AFA Over China's EBCP on Remand, Trade Court Rules
The Commerce Department legally dropped its reliance on adverse facts available for whether countervailing duty respondent Both-Well (Taizhou) Steel Fittings Co. benefitted from China's Export Buyer's Credit Program, the Court of International Trade held in a Sept. 13 opinion. Judge Claire Kelly previously sent back Commerce's use of adverse facts available over the Chinese government's unwillingness to submit certain information about its EBCP. The judge said that if the agency wanted to keep using AFA it had to attempt to verify the non-use of the program by looking at evidence from Both-Well and its U.S. customers. Commerce did so on remand, finding that the respondent did not benefit from the EBCP, dropping the company's CVD rate from 25.90% to 15.36%.
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The case concerns the first administrative review of the CVD order on forged steel fittings from China. In the review, it was alleged that Both-Well benefited from China's EBCP, wherein China's Export-Import Bank pays U.S. customers to buy Chinese exports. Commerce then asked the Chinese government for two pieces of information the agency deemed essential to understanding how the program works, allowing it to verify non-use: third-party banks that cooperate with the program and reforms made to the program by the Chinese government.
The Chinese government did not provide the information, resulting in Commerce hitting Both-Well with an AFA rate for the use of the EBCP. The trade court already has repeatedly ruled against the practice in other reviews, though Commerce still has not appealed to the U.S. Court of Appeals for the Federal Circuit. Both-Well's case was no different. Kelly said that the use of AFA was not warranted since Commerce failed to show why the information requested of the Chinese government was necessary to verify non-use in light of the certifications of non-use submitted by Both-Well (see 2202080035).
The judge recommended that Commerce ask Both-Well's U.S. customers for details of how they certified non-use of the EBCP. On remand, the agency did just that, receiving verification submissions from the customers showing that they didn't use the program. The evidence included "complete audited financial statements, general ledgers, trial balances, charts of accounts, loan documentation including details of the loan specifics and purpose, as well as screen shots from the customers’ accounting systems." Commerce said there was no evidence that the companies used the EBCP. No party contested the remand redetermination.
(Both-Well (Taizhou) Steel Fittings Co. v. United States, Slip Op. 22-105, CIT #21-00166, dated 09/13/22, Judge Claire Kelly. Attorneys: Peter Koenig of Squire Patton for plaintiff Both-Well; Roger Schagrin of Schagrin Associates for defendant-intervenor Bonney Forge Corp.; Kara Westercamp for defendant U.S. government)