Trade Court Upholds Use of AFA on China's EBCP Due to Exporter's Failure to Raise Issues Administratively
The Commerce Department properly saddled countervailing duty respondent Qingdao Ge Rui Da Rubber Co. (GRT) with adverse facts available related to its alleged use of China's Export Buyer's Credit Program, the Court of International Trade ruled in an Oct. 20 opinion. While Commerce and the trade court have rejected the use of AFA for this program where a respondent can submit verifications that their U.S. buyers didn't use the program, Judge Mark Barnett sustained AFA here since GRT failed to raise its claims against the use of AFA administratively.
GRT was a respondent in the 2020 review of the CVD order on truck and bus tires from China, and as part of the review, identified that it had a single U.S. customer: its owner, Cooper Tire & Rubber Co. The exporter said the customer didn't receive an EBCP loan, which is provided by China's Export-Import Bank to encourage foreign companies to buy Chinese products. Nevertheless, Commerce sought information from the Chinese government on how the program works. Beijing did not respond to these requests, though it did certify that none of GRT's U.S. customers used the EBCP.
The agency still hit the exporter with AFA, prompting the present CIT action. At the trade court, GRT argued that since the official who certified that none of the exporter's customers used the EBCP was an official of both GRT and Cooper, GRT practically submitted a non-use certification from its only customer. The exporter also said Commerce "failed to determine whether a benefit was conferred upon GRT" or its U.S. purchaser and also failed to give GRT a chance to verify the evidence on the record.
The U.S. said GRT never raised these points administratively, barring relief at the trade court. Barnett agreed, finding that since the respondent's arguments at the court are distinct from those before the agency, and the agency didn't have a chance to reconsider whether GRT's submissions are read as a customer certification of non-use, "Plaintiff failed to exhaust its administrative remedies."
The fact that GRT's submissions could have stood as a customer's non-use certification is significant, since Commerce has adopted a practice of not applying AFA where a company can submit evidence from its U.S. buyers that the purchasers didn't use the EBCP (see 2209130026).
GRT argued that raising its issues administratively would have been futile, claiming Commerce fully considered whether any of the company's evidence constituted a non-use certification. Barnett found this argument "unpersuasive," seeing as nothing indicates Commerce considered this point. The company also said that presenting the argument was futile since the result would have been obvious. Barnett ruled that raising the issue before Commerce was not obviously useless since the agency's approach was "undergoing change" in other cases, even by GRT's admission.
The respondent also claimed that even if it failed to exhaust its administrative remedies, Commerce still failed to support its findings with substantial evidence because the agency failed to make an affirmative benefit finding. "This argument, like those before, was not raised at the administrative level, despite Commerce’s preliminary determination containing the exact same language," Barnett said, adding that Commerce did actually find GRT benefited from the EBCP.
(Qingdao Ge Rui Da Rubber Co. v. United States, Slip Op. 23-153, CIT #22-00229, dated 10/20/23; Judge: Mark Barnett; Attorneys: Weronika Bukowski of Crowell & Moring for plaintiff Qingdao Ge Rui Da Rubber Co.; Sosun Bae for defendant U.S. government; Christopher Cloutier of Schagrin Associates for defendant-intervenor United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO)