359 F. Supp. 3d 1344
Ct. Int'l Trade2019Background
- Commerce conducted the first administrative review (POR: Feb. 4–Dec. 31, 2014) of countervailing duties on chlorinated isocyanurates from China; Heze Huayi and Jiheng were mandatory respondents.
- China ExIm administers Export Buyer’s Credit (preferential loans to foreign buyers) and Export Seller’s Credit (below-market loans to Chinese exporters). Investigation previously found the seller program countervailable and assigned a 0.87% rate for Jiheng; buyer program was not countervailed in the investigation based on purchaser non-use certifications.
- During the review, Heze submitted 44 customer declarations and the GOC stated none of respondents’ customers used the Export Buyer’s Credit Program; the GOC declined to provide certain China ExIm internal 2013 guidelines and program-level details Commerce requested.
- Commerce concluded the GOC withheld information necessary to verify non-use (e.g., role of third-party banks, POR interest rates, $2M contract threshold) and applied facts otherwise available and an adverse inference to find Heze used and benefited from the Export Buyer’s Credit Program.
- Commerce selected 0.87% (the Export Seller’s Credit rate from the investigation) as the adverse facts available rate under its hierarchical methodology; Heze’s final net CVD rate became 1.91%.
- The court reviews two challenges: (1) Heze argues Commerce’s use of adverse facts available/adverse inference was unlawful and unsupported; (2) Clearon challenges that the 0.87% AFA rate is inadequate or unsupported.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce permissibly used facts available and adverse inferences to find Heze used/benefitted from Export Buyer’s Credit despite non-use evidence | Heze: record contains abundant non-use evidence (44 customer declarations; GOC statements); Commerce failed to show requested info was necessary to verify non-use; AFA unlawful | U.S./Commerce: GOC withheld program-level information necessary to analyze program operation and verify non-use; absence impeded proceeding warranting AFA/AFA inference | Court: Use of facts available and adverse inference not supported. Commerce failed to show the missing info was necessary or tied to Heze’s merchandise, products, or customers; remand required |
| Whether Commerce lawfully applied an adverse inference against the GOC (and thereby against Heze) for failing to provide China ExIm internal docs | Heze: GOC responses and customer declarations sufficed; Commerce must use record information under 19 U.S.C. §1677m(e) instead of imputing use | Commerce: GOC was primary possessor; refusal to provide internal guidelines and program details meant verification impossible, justifying adverse inference | Court: Adverse inference improper here because Commerce did not explain why requested program details were necessary to verify non-use; remand ordered |
| Whether selecting 0.87% (Export Seller’s Credit investigation rate) as the AFA rate for Export Buyer’s Credit was supported by substantial evidence | Clearon: 0.87% is too low to deter non-cooperation and Commerce failed to justify similarity between buyer and seller credits | Commerce: used its hierarchical AFA method; seller-credit rate is from same proceeding and is a reasonable similar-program substitute | Court: If Commerce after remand sustains finding of use, 0.87% is supported by substantial evidence and permissible under Commerce’s hierarchy; Commerce may continue to use it |
| Remedy and remand scope | Heze/Clearon: seek vacatur or different rate | U.S.: defend Final Results | Court: Sustains Final Results in part (rate selection acceptable if use is sustained) but remands Commerce’s adverse facts available/use determination; instructs Commerce to tie requests to Heze and justify necessity of missing info; remand timeline set |
Key Cases Cited
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir. 2003) (describing two-step facts-available/adverse-inference framework)
- Delverde, SrL v. United States, 202 F.3d 1360 (Fed. Cir. 2000) (statutory requirement to determine government-provided subsidy before imposing CVD)
- Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365 (Fed. Cir. 2014) (foreign governments often best positioned to provide subsidy information)
- Essar Steel Ltd. v. United States, 721 F. Supp. 2d 1285 (Ct. Int’l Trade 2010) (Commerce’s use of government-supplied info in subsidy determinations)
- RZBC Group Shareholding Co. v. United States, 222 F. Supp. 3d 1196 (Ct. Int’l Trade 2017) (upholding a 10.54% AFA rate in a different buyer-credit context)
- SolarWorld Americas, Inc. v. United States, 229 F. Supp. 3d 1362 (Ct. Int’l Trade 2017) (discussing preferential rates under China ExIm buyer-credit program)