Commerce Nixes CVD Rate for Turkish Tax Exemption on Remand, Vows to Investigate Further
The Commerce Department decided not to countervail benefits received by countervailing duty respondent Kaptan Demir from Turkey's Banking and Insurance and Transaction Tax exemptions on remand at the Court of International Trade. The agency said that while there was not enough information to find that the exemptions were de facto specific, it faulted its lack of time on remand to gather sufficient information (Kaptan Demir Celik Endustrisi ve Ticaret v. United States, CIT # 23-00131).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Commerce said that it "intends to further examine whether this program is specific in subsequent proceedings, when ... [it] has additional time to issue questionnaires and review subsequent responses on a more extensive record."
On remand, the agency also stuck with its use of a report from Colliers International as a benchmark in assessing the benefit Kaptan derived from the provision of land for less than adequate remuneration. Commerce said the Colliers report is preferable to one from Cushman & Wakefield, since the Cushman report was prepared for the CVD proceeding.
The trade court remanded the 2020 CVD review on Turkish rebar for Commerce to reconsider its finding that the Turkish tax exemptions were de jure specific and its selection of the Colliers report (see 2410210019). Regarding the de jure specificity finding, the court said Commerce failed to show that the tax exemption on foreign exchange transactions was limited by enterprise or industry.
In response, Commerce dropped its de jure specificity finding, then issued a supplemental questionnaire to the Turkish government to see if the program was de facto specific. While the Turkish government gave some information on the program, it said it didn't possess key information, such as the "total amount of approved assistance" and the "total number of companies approved for assistance," since the taxpayers of the program are "individual financial institutions."
The agency stressed that "this information does not categorize or provide any details on the distribution of BITT exemptions on an enterprise or industry basis, nor does the information provide the number of enterprises or industries which actually received the exemptions.” As a result, Commerce said, it couldn't make a specificity determination.
And since the gap on the record wasn't caused by "the actions of an 'interested party or any other person' as envisioned by" the CVD statute, Commerce didn't use adverse facts available. The agency adjusted Kaptan's CVD rate down to 1.26%, noting that it intends in the future to look into whether the exemptions have an additional basis on which to base the de facto specificity finding, "for example whether the traded goods sector is a predominant or disproportionate user of the program."
The trade court also sent back the use of the Colliers report as a benchmark. Kaptan took issue with the report, arguing that it's unreliable since Colliers doesn't provide or describe its sources and includes a disclaimer freeing it from liability regarding inaccuracies in the report. The respondent also argued that the report is "distortive" since it's not based on similar property but the richest land in Turkey, which the court previously found inappropriate for "benchmarking elsewhere in the country and which Commerce has only modified for population density while ignoring other information on the record relating to various comparability issues."
On the report's liability disclaimer and data sources, Commerce said the court already addressed these issues, finding the disclaimer "unpersuasive because disclaimer of liability is not at issue." The court also said "the fact that the Colliers report is based on numbers compiled by Colliers does not disqualify the data, but rather strengthens the case to use the Colliers report as it is not using secondary sources or compiling sets of data from other sources.”
On Kaptan's comparability concern, Commerce said at the outset that it ideally looks to use a respondent's own private purchases of the same good in question. The agency said there's nothing on the record showing that the Colliers report isn't comparable to "Kaptan Demir’s Trabzon land purchases."
While Kaptan said that rent figures in Turkey are strictly in line with the per capita GDP of cities, there's "no record evidence for this claim," the brief said. And while Kaptan also complains of the "level of development of the land, the levels of competition and market size, and the physical distance between Trabzon and Istanbul," the respondent similarly provides no information to "quantify the proportional effect of these concerns," Commerce said.
The agency emphasized its strong aversion to the Cushman report, given that it was prepared for the CVD proceeding.