Rebar Exporter's Untimely Letter Still Provided Notice of Subsidy to Commerce, US Says

Kaptan argued in November that Commerce couldn’t countervail Turkiye’s Law 27256 because the only record evidence of it was the department’s written rejection of Kaptan’s letter (see 2411210044).

But “the lack of evidence on the record is precisely why Commerce was justified in using AFA: the information is missing on the record because parties failed to timely submit it,” the U.S. said. Although Kaptan informed Commerce that the law existed, it had “failed to do so in a way that preserved that information on the record,” it said.

The U.S. argued the fact that Kaptan did provide the information, months after the exporter submitted its initial questionnaire response, “proved that it could have furnished the requested information, but did not.” As a result, lacking timely record evidence, Commerce reasonably turned to AFA to fill in the blanks on the program, it said.

Kaptan’s argument that the program couldn’t be countervailed “directly contradict[ed] the purpose of the AFA statute: to ensure that a party does not ‘obtain a more favorable result by failing to cooperate than if it had cooperated fully,’” the U.S. said.

Rebar Action Coalition argued that relying on that rejected letter’s mention of the subsidy, or the department’s own memo rejecting it, wasn’t relying on the “substance” of Kaptan’s letter -- as that would be prohibited by Commerce’s own regulations -- and had been adequate to support the department’s results.

“Kaptan does not establish that the agency’s regulations do more than prevent it from relying on the substance of rejected submissions in its determinations,” it claimed. “Here, Commerce did not go beyond that. At most, it relied on its memorialization of its rejection, which naturally identified -- in the briefest, non-substantive terms -- the rejected information.”

Both parties also noted that Kaptan also discussed the program with Commerce officials at verification, although Commerce didn’t accept the information “because verification is not an appropriate venue to provide new factual information,” the U.S. said. But verification served again to put Commerce on notice that the program existed, it said.

The parties also addressed Kaptan’s other claims. Both said the department was right to reject a report of land benchmark prices Kaptan had compiled because the report was made in preparation for litigation. The petitioner also said the exporter’s opposition to the application of AFA to an unemployment insurance tax reduction, Law 4447, hadn’t been exhausted administratively, while the U.S. defended AFA for Law 4447 as reasonable because Kaptan hadn’t offered Commerce anything about it in its initial questionnaire response; it “merely provided that Kaptan received a benefit from a program under Law 6645, and did not explain that that law was in any way related to Law 4447.”

And both said Commerce correctly determined that Turkey’s exemption from taxes on foreign currency transactions (BITT) was de jure specific, and that it correctly applied AFA regarding Kaptan’s use of the program. They supported the department’s finding that the criteria for qualifying for an exemption “necessarily limited” it “to companies that make foreign exchange transactions.”

“In the past, Commerce has found subsidies that could theoretically be used by any industry to be de jure specific where the subsidy's availability was inherently linked with certain activities,” Rebar Trade Action Coalition said.

The government said Kaptan hadn’t shown that “every Turkish company is eligible for a certificate” exempting it from BITT taxes, nor that “every firm actually obtains such a certificate.” Even if Kaptan had, the BITT exemption was only actually received by companies that conducted foreign exchange transactions, the U.S. said.

Rebar Trade Action Coalition acknowledged that the Court of International Trade remanded the same finding in a prior proceeding, but said each administrative review “stands on its own.” And even if the exemption can’t be considered de jure specific, it should be remanded so Commerce can conduct a de facto inquiry, it said.

In defense of Commerce’s application of AFA regarding Kaptan’s use of the program, the two parties also said the department “reasonably determined” that Kaptan hadn’t reported all of its foreign exchange arbitrage transactions.

Kaptan argued that it hadn’t known Commerce would consider arbitrage transactions to fall under the BITT program, but that wasn’t relevant because the department had asked Kaptan to report every benefit it had gained from the BITT program. Commerce “did not need to specify types of transactions were relevant to its inquiry for Kaptan to respond fully,” it said.

And despite what the exporter claimed, substantial evidence does show BITT applies to arbitrage transactions, as “there is nothing in the Turkish law establishing the BITT that indicates that the tax is imposed only on transactions involving Turkish lira,” Rebar Trade Action Coalition said. Other evidence also contradicted Kaptan’s position, it said, although it was redacted from the public version of its brief.

The petitioner and the U.S. both said Kaptan failed to cooperate to the best of its ability, even if unintentionally.

“There is no intent requirement in finding that a party failed to cooperate by not acting to the best of its ability,” the government said.