Guizhou Tyre Co. v. United States

2019 CIT 171

Opinion

Slip Op. 19- UNITED STATES COURT OF INTERNATIONAL TRADE

GUIZHOU TYRE CO., LTD.; GUIZHOU TYRE IMPORT & EXPORT CO., LTD; & XUZHOU XUGONG TYRES CO., LTD.,

Plaintiffs,

and Before: Richard W. Goldberg, Senior Judge Consolidated Court No. 17-00101 TIANJIN UNITED TIRE & RUBBER INTERNATIONAL CO., LTD.,

Plaintiff-Intervenor,

v.

UNITED STATES,

Defendant.

OPINION [Sustaining the Department of Commerce’s remand redetermination.]

Dated: December 26, 2019

Ned H. Marshak & Andrew T. Schutz, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of New York, NY, and Richard P. Ferrin & Douglas J. Heffner, Drinker Biddle & Reath, LLP, of Washington, D.C., for plaintiffs.

John Todor, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Emma T. Hunter, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Goldberg, Senior Judge: This matter returns to the court following a second remand of

the final determination of the U.S. Department of Commerce (“Commerce” or “the Department”)

in its countervailing duty (“CVD”) investigation of off-the-road tires from the People’s Republic

of China (“PRC”). Certain New Pneumatic Off-the-Road Tires from the People’s Republic of Consol. Court No. 17-00101 Page 2

China, 82 Fed. Reg. 18,285 (Dep’t Commerce Apr. 18, 2017) (final results), amended by Certain

New Pneumatic Off-the-Road Tires from the People’s Republic of China, 82 Fed. Reg. 40,554

(Dep’t Commerce Aug. 25, 2017) (am. final results) (“Amended Final Results”) and

accompanying Issues & Decision Mem. (“I&D Mem.”). The two prior opinions of this court

thoroughly set forth the facts underlying this remand. Guizhou Tyre Co. v. United States, 42 CIT

__, 348 F. Supp. 3d 1261 (2018) (“Guizhou I”); Guizhou Tyre Co. et al. v. United States, 43 CIT

__, 399 F. Supp. 3d 1346 (2019) (“Guizhou II”). The court presumes familiarity with those

opinions. Shortly after this court’s second remand opinion, Commerce submitted its Final

Results of Redetermination Pursuant to Court Remand, ECF 109-1 (Nov. 19, 2019) (“Second

Remand Results”). Plaintiffs Guizhou Tyre Co. and Guizhou Tyre Import and Export Co.

(collectively “Guizhou”) as well as Xuzhou Xugong Tyres Co. (“Xugong”) have agreed with the

conclusion drawn in the Department’s remand results. For the reasons discussed below, the

court sustains Commerce’s Remand Results.

BACKGROUND

In this administrative review, Commerce examined whether Plaintiffs benefited from the

Export Buyer’s Credit Program (“EBCP” or “the Program”), a loan program instituted by the

Government of China (“GOC”) that provides loans to foreign companies to promote the export

of Chinese goods. See Guizhou I, 42 CIT at __, 348 F. Supp. 3d at 1267–69. Previously, in

response to each of Commerce’s questions regarding the Program’s operation, the GOC

responded that “none of their relevant customers used the Program.” Id. In support thereof,

Guizhou submitted declarations from its U.S. customers confirming non-use. Id. at 1271.

In its Final Determination, Commerce concluded that the GOC both withheld requested

information and significantly impeded the proceeding such that the Department has applied a Consol. Court No. 17-00101 Page 3

rate under adverse facts available (“AFA”) for each respondent based on Plaintiffs’ presumed

benefit from the EBCP. I&D Mem. at 24. According to Commerce, there is a “‘gap’ in the

record [which] . . . prevents complete and effective verification of the customer’s [sic]

certifications of non-use,” id., such that the Department cannot verify the respondent’s non-use

declarations. Consequently, Commerce applied an adverse inference that Plaintiffs used and

benefited from the Program. In Guizhou I, the court held that Commerce had misapplied AFA

under 19 U.S.C. § 1677e when it failed to make “an initial finding . . . that material information

was missing from the record.” Guizhou I, 348 F. Supp. 3d at 1270.

On the first remand, Commerce explained that during a CVD investigation of chlorinated

isocyanurates in 2012, the Department “learned for the first time that the rules for administering

the EBCP had been revised in 2013.” Final Results of Redetermination Pursuant to Court

Remand 10, ECF 93-1 (Mar. 5, 2019) (“First Remand Results”). The revisions to the EBCP

include a limiting provision of Export Buyer’s credits to business contracts exceeding two

million dollars and the use of third-party banks to disburse Export Buyer’s credits. According to

Commerce, these revisions to the EBCP make verification of any non-use affidavits

“unreasonably onerous, if not impossible” because verification would now “require knowing the

names of the intermediary banks.” First Remand Results at 12−13. Therefore, Commerce “no

longer attempts to verify usage” at all, id. at 13 n.36.

Plaintiffs and the GOC maintained that the rule change was “internal to the bank” and

“non-public,” First Remand Results at 10, and moreover, that the change had little relevance to

Commerce because Guizhou already demonstrated that its U.S. customers do not use the

Program. Consol. Court No. 17-00101 Page 4

The court took issue with several aspects of the First Remand Results. First, the

Department failed to explain how the rule change affected the way the Department conducts

verification of non-use declarations, or why Commerce could not verify the non-use declarations

using different tools at its disposal. Guizhou II, 399 F. Supp. 3d at 1351. Second, the

Department failed to show the requisite gap needed to make an adverse inference—and how that

gap would be filled by the information that it is requesting. Id. at 1352. And more so, the court

faulted the Department for inconsistently interpreting what constitutes a gap for the purposes of

applying an adverse inference to the EBCP.

The Department issued its Second Remand Results shortly following the court’s last

opinion. Commerce has reconsidered its decision to apply AFA in evaluating use of the EBCP

and now determines, “under protest,” that the EBCP program was not used by the respondents

based on the certifications submitted by Plaintiffs. Second Remand Results at 1.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court must sustain

Commerce’s remand redetermination if it is supported by substantial record evidence, is

otherwise in accordance with law, and is consistent with the court’s remand order. See Ad Hoc

Shrimp Trade Action Comm. v. United States, 38 CIT __, __, 992 F. Supp. 2d 1285, 1290 (2014);

see also 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

In its second remand results, Commerce “complied, under protest, with the Court’s ruling

and now finds that neither of the respondents used this program during the [period of review].”

Second Remand Results at 8. The Department relied on the non-use certifications submitted by

Plaintiffs from its customers to reach its conclusion, as well as record statements by Xugong that Consol. Court No. 17-00101 Page 5

it confirmed with its customers that none used the program. Id. Commerce further removed the

EBCP program rate from the list of rates included in the calculation of Plaintiffs’ subsidy rates.

Id. at 9.

The court affirms the Department’s determination that the record evidence sufficiently

demonstrates that neither Guizhou nor its customers used the Program. However, the court does

not affirm all of the statements Commerce included in its remand redetermination. Commerce is

steadfast in continuing “to find a ‘gap’ in the record” and “that this gap prevents an accurate and

effective verification of Guizhou Tyre’s customers’ certification of non-use and Xuzhou

Xugong’s statements that its customers did not use the program.” Second Remand Results at 8.

However, it seems the Department misinterpreted this court’s multiple opinions on the EBCP

and the issue the court took with the Department’s decision to apply an adverse inference.

The adverse use of facts otherwise available can only be used to fill gaps necessary to

complete the factual record. Guizhou II, 399 F. Supp. 3d at 1349. The Department has provided

a myriad of reasons why verification might be onerous without additional information pertaining

to the EBCP revisions. But until these reasons are grounded in facts supported by the record—

that is, until the Department actually attempts verification and adequately confronts these

(purportedly) insurmountable challenges, there is little for the Department to hang its hat on

when it “continues to find a ‘gap’ in the record,” Second Remand Results at 8. The court is

sympathetic to the Department’s struggles surrounding this Program, but an adverse inference is

not one that can be applied just because Commerce is unsatisfied with the respondent’s answers

about the EBCP’s operations—a program that Plaintiffs do not even use, according to the only

evidence available on the record. The court remains convinced that the Department has not Consol. Court No. 17-00101 Page 6

adequately addressed what the gap in the record is (as required under the AFA statute), or, that

the missing information is required to effectively verify respondent’s non-use of the Program.

Therefore, for the reasons provided in Guizhou I, Guizhou II, and discussed here, the

court views as correct the Department’s decision, albeit made under protest, to find that neither

of the respondents used the Program during the period of review.

CONCLUSION

The court rules that Commerce was correct in deciding that the Plaintiffs did not use the

EBCP based on the record evidence. For the foregoing reasons, Commerce’s Remand Results

are SUSTAINED. Judgment will enter accordingly.

/s/ Richard W. Goldberg Richard W. Goldberg Senior Judge

Dated: December 26, 2019 New York, New York