Commerce Continues Defense of EBCP Stance Despite Claims That It Has Been Discredited

The Commerce Department continued to defend its use of adverse facts available relating to China's Export Buyer's Credit Program in a countervailing duty case despite recent claims that it has discredited its position on this program. In a Nov. 2 brief filed at the Court of International Trade, Commerce said that it is not simply compelled to rely on CVD respondents' statements that an alleged subsidy program was not used when a government fails to give information on how the program was administered to the point where verification of non-use is impossible (Both-Well (Taizhou) Steel Fittings v. U.S., CIT #21-00166).

The brief comes in a case brought by Both-Well (Taizhou) Steel Fittings, Co., Ltd., that challenges the final determination of the 2018 administrative review of the countervailing duty order on forged steel fittings from China. Prior to the review, the CVD petitioner alleged that the respondents were benefiting from China's EBCP -- a program wherein China's Export-Import Bank gives loans to U.S. customers to buy Chinese goods. To verify that the respondents' U.S. customers did not use this program, Commerce asked for proof of non-use from the respondents and their customers. They all submitted statements that they did not use the program.

Unsatisfied, Commerce then requested further information from the Chinese government over the nature of the program. Specifically, the agency requested information over an alleged threshold under which loans are not made and the names of banks that participate in the program. When the Chinese government did not provide this information, Commerce hit the respondents with AFA.

However, in a separate CVD investigation, Commerce recently said that it was able to verify that the respondents' U.S. customers did not use the program without this requested information from China (see 2110140053). The agency merely relied on the respondents' and their customers' statements. A plaintiff in another CVD case has already jumped on this development, telling CIT that Commerce's actions here have discredited its position on the EBCP (see 2110290063).

Nevertheless, Commerce forged ahead with its continued defense of AFA for the EBCP in the Nov. 2 brief. "The Court’s decisions on the EBC program have turned Commerce’s standard verification procedures on their head," the agency said. "Now, if both the responding government and responding companies claim a program is not used, the responding government may decline to explain how the program works, including aspects as fundamental as eligibility and which banks provide loans. The absence of such key information on the record will lead to verifications involving examination of the financial records of each U.S. purchaser without Commerce officials knowing whether loans from certain banks or under a certain threshold could be ignored, or documents might be expected to accompany an EBC loan. Commerce would also be unable to confirm that a company reported its total EBC loans by checking company records against those of the [government of China (GOC)]."