Commerce Says It Verified Non-Use of Export Buyer's Program Without Cooperation From China
The Commerce Department found that a countervailing duty investigation respondent's U.S. customers did not use China's Export Buyer's Credit Program in the investigation's final determination despite the Chinese government's continued failure to provide information, indicating a potential shift in how the agency will approach how it verifies non-use of the program.
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The EBCP provides low-interest loans to U.S. purchasers for the purpose of buying Chinese goods. Commerce has often seen allegations from CVD petitioners claiming that this amounts to a countervailable subsidy for the Chinese exporters. The agency, in an attempt to verify whether a CVD respondent's customers actually used the program, claims that it needs certain information from the Chinese government about how the program works to verify if the customers used it or not.
China has repeatedly failed to provide this information, leading to Commerce applying adverse facts available to the exporters. The purchasers, along with the respondents, declare to Commerce that they don't use the program, but the agency says it cannot verify for itself that this is true without the information from the Chinese government. The agency's AFA application has repeatedly been struck down by the Court of International Trade, but that is as far as it gets, since Commerce has not appealed the repeated ruling. This process has been repeated numerous times, with Judge Timothy Reif at CIT even requesting that Commerce provide an incredibly thorough explanation as to why it needs this information to verify non-use.
This cycle was upended on Oct. 12 when Commerce said it verified that a CVD investigation respondent and its customers did not use the program without the requested information from the Chinese government. The change came in the final determination of a CVD investigation into certain mobile access equipment and subassemblies thereof from China. After the Chinese government again failed to give Commerce the information it wanted, the agency issued supplemental questionnaires to the mandatory respondents, Dingli and LGMG, and their U.S. customers, and verified non-use using their answers.
"We received complete responses from the respondents, and, consequently, as facts available, we find that neither Dingli nor LGMG – or their U.S. customers used the program," the final determination said. "However, we note that our ability to fully analyze the respondents’ financial records and verify certain information could potentially have been bolstered by an onsite verification and the findings thereof."
Added Andrew Schutz of Grunfeld Desiderio, counsel for the respondents: "I think there is a policy shift. The Department engaged in the exercise that we have advocated since the very beginning -- a verification of non-use of the EBCP at the U.S. customer [level] -- something the Department had professed, on countless occasions, that it could not do. In our case, the Department correctly found that it could verify the non-use of this program at the U.S. customer level. Our position has always been that such a verification would not be onerous and that information could be reviewed that conclusively established non-use. This MAE decision proves that. We look forward to engaging with the Department in future cases, so that the Department is satisfied as to non-use, the respondent and its customer are fairly and reasonably treated, and CIT precedent is followed."