Guizhou Tyre Co. v. United States , 2019 CIT 171 ( 2019 )

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