2019 CIT 114
Ct. Int'l Trade2019Background
- This case concerns Commerce's application of adverse facts available (AFA) in the countervailing-duty investigation of certain new pneumatic off-the-road tires from the PRC for 2014, specifically as to whether respondents used and benefited from China's Export Buyer's Credit Program (EBCP).
- The Government of China (GOC) answered Commerce's inquiries stating that none of the relevant U.S. customers used the EBCP; plaintiffs (Guizhou and Xuzhou Xugong) submitted declarations from U.S. customers attesting non‑use.
- Commerce applied AFA, concluding the GOC withheld information about a purported 2013 internal rule change to the EBCP and that a resulting ‘‘gap’’ precluded effective verification of non‑use, so it treated respondents as users/beneficiaries.
- On prior review (Guizhou I), the Court found Commerce erred by failing to identify a record gap that would justify AFA and remanded for explanation; Commerce issued new remand results reiterating its AFA finding and emphasizing the alleged 2013 rule change.
- Plaintiffs did not contest Commerce’s other remand adjustments (nylon cord benchmark and VAT attribution) and challenge only Commerce’s renewed AFA justification for the EBCP.
- The Court again holds Commerce’s AFA determination unsupported by substantial evidence: Commerce failed to show why the 2013 rule change is relevant to verifying non‑use, inconsistently defines a ‘‘gap,’’ and based its conclusion on its own failure to request verification‑enabling information.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce may apply AFA to find respondents used EBCP without identifying a record gap under 19 U.S.C. § 1677e(b) | Commerce failed to identify what material information is missing and how it affects verification; declarations of non‑use are uncontradicted | GOC withheld internal 2013 EBCP rules and other operational information, creating a gap that makes verification onerous or impossible | Court: Commerce did not show a record gap or tie the missing information to verification needs; AFA application is unsupported and unlawful; remand ordered |
| Relevance of the alleged 2013 internal EBCP rule change to verification of non‑use | The 2013 internal rule change is non‑public and not shown to affect ability to verify customer non‑use; Commerce did not explain why it matters | The 2013 revisions changed program operation such that verification requires intermediary bank information and thus is impracticable without those rules | Court: Commerce failed to demonstrate how the 2013 change impacts verification or why it renders verification infeasible; speculation insufficient |
| Whether Commerce may find lack of cooperation when missing verification info resulted from Commerce’s own inadequate questioning | Plaintiffs argue Commerce never adequately requested the specific information needed for verification; burden lies on Commerce to ask clear questions | Commerce contends the GOC refused to provide internal documents, causing the gap | Court: Commerce cannot blame respondents for difficulties caused by Commerce’s narrowly tailored or omitted requests; adverse inference improper when Agency failed to seek needed information |
| Consistency in defining a "gap" across proceedings | Plaintiffs point to prior Commerce determinations accepting uncontradicted customer non‑use affidavits without seeking more | Commerce argues its understanding evolved after learning of 2013 rules and thus a gap now exists | Court: Commerce’s shifting standard is inconsistent; prior acceptance of similar affidavits undermines current gap finding |
Key Cases Cited
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir. 2003) (agency must explain what information is missing and how adverse inferences reasonably follow)
- Dongbu Steel Co. v. United States, 635 F.3d 1363 (Fed. Cir. 2011) (agency action is arbitrary when it treats similar situations differently without sufficient reason)
- Peer Bearing Co.-Changshan v. United States, 853 F. Supp. 2d 1365 (Ct. Int’l Trade 2012) (Commerce must clearly and adequately communicate information requests before invoking adverse inferences)
- Changzhou Trina Solar Energy Co. v. United States, 255 F. Supp. 3d 1312 (Ct. Int’l Trade 2017) (customer declarations of non‑use can suffice where no record evidence contradicts them)
- Guizhou Tyre Co. v. United States, 348 F. Supp. 3d 1261 (Ct. Int’l Trade 2018) (remand for Commerce to justify initial finding of missing material information before applying AFA)
- SolarWorld Americas, Inc. v. United States, 229 F. Supp. 3d 1362 (Ct. Int’l Trade 2017) (treating remand redeterminations as subject to court review for compliance)
- Clearon Corp. v. United States, 359 F. Supp. 3d 1344 (Ct. Int’l Trade 2019) (criticizing Commerce for not explaining why requested information was needed or how it related to respondents/customers)