Recent CIT Opinion Reversing Course on China's EBCP Pops Up in Separate CVD Case
The Court of International Trade should uphold the Commerce Department's application of adverse facts available for China's Export Buyer's Credit Program after the trade court in a separate case accepted the agency's explanation of why missing information from the Chinese government was needed to verify non-use, countervailing duty petitioner American Kitchen Cabinet Alliance (AKCA) argued in comments on Commerce remand results Sept. 28 (Dalian Meisen Woodworking Co., et al. v. United States, CIT #20-00110).
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AKCA invoked the recent CIT decision in Fujian Yinfeng v. U.S., which bucked a long line of past trade court rulings over whether the agency can use total adverse facts available by accepting Commerce's explanation as to why it needed the requested information from the Chinese government to verify non-use of the program (see 2209140029).
The case, brought by CVD respondent Dalian Meisen Woodworking, concerns the CVD investigation on wood cabinets and vanities from China. Commerce applied AFA on the alleged use of the EBCP by Meisen's U.S. customers. The agency said the use of AFA was justified since the Chinese government refused to provide two key pieces of information regarding how the program works: information about the role of third-party banks in disbursing credits, and revisions made to the program in 2013. However, the respondents in the investigation submitted declarations from their U.S. customers that they did not use the program.
As it has held many times, the court found Commerce did not establish solid enough grounds to use AFA for this program (see 2205230033). But in the decision, Judge Richard Eaton told Commerce to find a practical solution for verifying information from CVD respondents' U.S. customers that shows that they did not use the EBCP. On remand, the agency issued supplemental questionnaires to the respondents, "requesting very expansive and highly confidential information from all of their unaffiliated customers." Meisen argued this move was designed to create artificial gaps in the record to give it cover to use AFA (see 2209060056).
AKCA, in comments on Commerce's remand, cited the Fujian Yingfeng decision to argue the court should uphold the use of total AFA. In the remand, the agency gave "extensive explanations" as to why this withheld information was needed to verify non-use of the EBCP, the petitioner said.
"These explanations -- coupled with Commerce’s practical, but ultimately unsuccessful attempts to obtain information directly from respondents" that allow it to verify non-use of the EBCP -- far exceed what CIT "deemed sufficient to justify resort to facts otherwise available and an adverse inference in Fujian Yinfeng," the comments said.
AKCA also cited Commerce's recent administrative practice of verifying non-use of the EBCP without the requested information from the Chinese government. While some respondents have used this as evidence that the Chinese government's information is not needed to verify non-use, AKCA went in the opposite direction. The petitioner said the findings in these administrative proceedings "does not detract from the approach itself or the fact that it has been effective in other proceedings." In the CVD investigation, Commerce did not get full responses from Meisen and The Ancientree Co., precluding its ability to verify non-use, the brief said.
"In short, pursuant to the Court’s remand instructions, Commerce attempted to verify Meisen’s and Ancientree’s non-use claims using a methodology that proved effective, practical, and reasonable in two previous proceedings," the comments said. "As explained in great detail in the Remand Redetermination, Meisen’s and Ancientree’s incomplete responses to Commerce’s supplemental questionnaires simply were not sufficient to overcome the Government of China’s refusal to cooperate with Commerce’s attempts to understand the operation of the program in a manner that permitted verification of their non-use."