Petitioners Say AFA Needed Due to Failure to Submit Chinese Land-Use Contracts
The Commerce Department erred in finding that respondents Heze Huayi Chemical Co. and Juancheng Kangtai Chemical Co. cooperated to the best of their ability despite a failure to produce land-use purchase contracts in the 2021 review of the countervailing duty order on chlorinated isocyanurates from China, petitioners led by Bio-Lab argued (Bio-Lab v. U.S., CIT # 24-00118).
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Filing a motion for judgment at the Court of International Trade earlier this month, Bio-Lab said the agency ignored its past practice and "binding judicial practice" when it ignored the respondents' "inadequate record keeping and failure to provide the requested documentation."
In the review, the petition alleged that Heze Huayi and Kangtai benefited from land-use rights provided by the Chinese government for less than adequate remuneration. Commerce asked the Chinese government for translated copies of contracts between the government and the respondents that would establish the price paid and the terms of sale for land-use rights. The Chinese government refused to respond, and both respondents failed to submit the contracts, claiming that they had been lost or misplaced.
Commerce acknowledged in the review "that the land-use contracts were necessary to validate the purchase price and critical to analyzing whether respondents received land-use rights for LTAR," Bio-Lab said. While the respondents submitted "self-selected lists of payments," they didn't submit "any direct evidence, such as a contract, of the original purchase price for the land," the brief said.
Commerce said the payment data wasn't a substitute for the contracts, which are key for determining whether the land-use payments "included interest expenses, taxes, or other charges that were not included in the benchmark for determining a subsidy," the brief said. With this gap in the record, the agency failed to use adverse facts available against the respondents for their failure to submit direct evidence, Bio-Lab said.
The petitioner said that, as established by the U.S. Court of Appeals for the Federal Circuit in Nippon Steel Corp. v. U.S., the use of AFA is established "where parties failed to provide documents requested by Commerce."