2019 CIT 59
Ct. Int'l Trade2019Background
- Commerce conducted the 2015 administrative review of the countervailing duty order on certain off‑the‑road (OTR) tires from the PRC; Guizhou (mandatory respondent) plus consolidated plaintiffs TUTRIC and Zhongwei challenged Commerce's Amended Final Results.
- Commerce preliminarily found countervailable benefits from: (1) the China Export‑Import Bank Export Buyer's Credit Program (applying AFA to find use/benefit), (2) Processing Trade duty/VAT exemptions, and (3) LTAR inputs (synthetic rubber, natural rubber, carbon black, nylon cord) using Tier 1 and Tier 2 benchmarks that included ocean freight and duties.
- Guizhou and the GOC submitted declarations and customer statements asserting non‑use of the Export Buyer's Credit Program; Commerce nonetheless sought additional information on program operations from EXIM and applied AFA when it found the record incomplete.
- Commerce found the synthetic rubber market in China not distorted for 2015 (thus using Tier 1 import‑based benchmarks), a conclusion differing from its 2014 review.
- Commerce concluded the Processing Trade Program lacked an adequate government system to confirm which inputs were consumed and in what amounts, so exemptions were countervailable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Application of adverse facts available (AFA) to Export Buyer's Credit Program | AFA was improper because Guizhou and the GOC submitted sworn customer declarations showing non‑use; Commerce failed to identify a record gap or explain why submitted evidence was unverifiable | Commerce needed EXIM operational records to verify non‑use and the GOC failed to provide them, warranting AFA | Remanded: Court held Commerce lacked substantial evidence of a missing, verifiable record and improperly jumped to AFA; Commerce must reconsider adverse inference and explain basis for any AFA |
| Synthetic rubber market distortion / benchmark tier selection | Commerce failed to adequately explain reversal from 2014 (where market was found distorted) and did not rationally connect data changes to its 2015 no‑distortion conclusion | Commerce relied on changes in production/import shares between 2014–2015 to justify lack of distortion | Remanded: Court found Commerce’s explanation inadequate and ordered Commerce to explain how 2014→2015 changes justify the different distortion conclusion |
| Adjustments to LTAR benchmarks for delivery/domestic supply conditions | Benchmarks should be adjusted to reflect prevailing market conditions (domestic supply share); Guizhou argued Commerce failed to make proper adjustments | Commerce relied on its AFA finding that domestic input suppliers were government "authorities," making domestic prices inappropriate comparators; thus use of import‑based benchmarks was reasonable | Sustained in part: Court upheld Commerce’s Tier 1 (rubbers) and Tier 2 (carbon black, nylon cord) benchmarks because they flowed from a reasonable AFA finding regarding domestic suppliers |
| Processing Trade Program countervailability | Guizhou argued it provided sufficient records and verification showing inputs consumed and duties paid when inputs entered domestic market; alternatively, records satisfy regulatory alternative (actual examination) | Commerce found GOC and respondent submissions did not demonstrate a specific, reasonable, effective government system to confirm inputs consumed/amounts, so exemptions were countervailable | Sustained: Court found Commerce’s determination supported by substantial record evidence and within agency discretion |
Key Cases Cited
- Universal Camera Corp. v. N.L.R.B., 340 U.S. 474 (standard for substantial evidence review)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (agency must articulate rational connection between facts and choice)
- Chenery Corp. v. U.S. (SEC v. Chenery Corp.), 318 U.S. 80 (courts may not accept post hoc rationalizations)
- Nippon Steel Corp. v. United States, 458 F.3d 1345 (AFA requires explanation of missing information and reasonableness of adverse inference)
- CS Wind Vietnam Co. v. United States, 832 F.3d 1367 (agency must consider record evidence that "fairly detracts")
- PAM, S.p.A. v. United States, 582 F.3d 1336 (substantial evidence standard in CVD context)
- Maverick Tube Corp. v. United States, 857 F.3d 1353 (benchmark tier framework and when to use world market prices)
- Guizhou Tyre Co. v. United States, 348 F. Supp. 3d 1261 (CIT decision addressing similar issues in prior review)