CIT Tells Commerce to 'Find a Practical Solution' on Verifying Non-Use Information for China's EBCP

The Commerce Department must "find a practical solution" to verify information from countervailing duty respondents' U.S. customers that shows that they did not use China's Export Buyer's Credit Program, the Court of International Trade said in an opinion released May 20. Adding to a long line of CIT opinions striking down Commerce's use of adverse facts available over the EBCP, Judge Richard Eaton said that the agency can either find a solution to verify the non-use of the program on the record or recalculate the CVD rates for the two mandatory respondents, Dalian Meisen and Ancientree, without using the subsidy rate for the EBCP.

In the opinion, Eaton also sustained Commerce's plywood benchmarking decision and selection of Harmonized Tariff Schedule subheadings. While the position was challenged by the plaintiffs, led by Meisen, the judge ruled that the agency used the HTS subheading each respondent certified it used to make its product and that "nothing more is needed."

Meisen launched its case to challenge the underlying countervailing duty investigation on wood cabinets and vanities from China. In the investigation, Commerce hit the respondents with AFA over the supposed use of the EBCP. The agency said the use of AFA was needed 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 before, the court said that Commerce did not establish solid enough grounds to use AFA for this program. "As this Court has found in prior cases with similar records, it is difficult to see how missing operational information about the program is 'necessary' or relevant in the face of Plaintiffs’ nonuse evidence," Eaton said. The judge then continued to lay into the agency's reasoning for its use of AFA, which was that this information is needed to verify non-use of the program and that the task is impossible without it.

"The problem with this argument is that the withheld information is (at best) only indirectly related to alleged actual use of the program by Meisen’s and Ancientree’s U.S. customers," the opinion said. "Moreover, Commerce’s argument that the operational information is necessary to verify the accuracy of the non-use information because without it, verification is unreasonably burdensome using its typical procedure, rings hollow when Commerce fails to even try." On remand, Commerce can either find a practical solution to verify the U.S. customers' non-use evidence or drop the EBCP subsidy rate, Eaton said.

As for the other issue in the case, Commerce's benchmark for plywood, the judge sustained the agency's position. Meisen contested the issue to argue against Commerce's position to use a different benchmark for Meisen than it used for Ancientree. However, the agency said it used the HTS subheading that each respondent reported. The judge said this was fine.

(Dalian Meisen Woodworking Co. v. United States, Slip Op. 22-45, CIT #20-00110, dated 05/20/22, Judge Richard Eaton. Attorneys: Stephen Brophy of Husch Blackwell for plaintiff Dalian Meisen; Alexandra Salzman of deKieffer & Horgan for plaintiff-intervenor The Ancientree Cabinet Co., Ltd.; Mark Ludwikowski of Clark Hill for plaintiff-intervenor Cabinets to Go; Iona Cristei for defendant U.S. govenrment; Christopher Cloutier of Schagrin Associates for defendant-intervenor American Kitchen Cabinet Alliance)