Opinion ID: 4562709
Heading Depth: 2
Heading Rank: 2

Heading: Export Subsidy Offset

Text: If imported merchandise is subject to both antidumping and countervailing duties, Commerce “shall,” when calculating a respondent’s antidumping duty rate, “increase[]” the respondent’s “export price” or “constructed export price” by “the amount of any countervailing duty imposed . . . to offset an export subsidy[.]” 19 U.S.C. § 1677a(c)(1)(C). Commerce may impose countervailing duties when it “determines that the government of a country or any public entity within the territory of a country is providing, directly or indirectly, a countervailable subsidy” Case: 20-1004 Document: 64 Page: 13 Filed: 09/03/2020 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES 13 for “the manufacture, production, or export of” the subject merchandise. Id. § 1671(a)(1); see id. § 1677(5) (providing that a “countervailable subsidy” is a “financial contribution,” “income or price support,” or “funding mechanism” provided by “an authority,” such as a government, “to a person” with “a benefit . . . thereby conferred”). To be countervailable, a subsidy must be “specific.” Id. § 1677(5)(A). To be “specific” a subsidy must be “an export subsidy,” “an import substitution subsidy,” or one of certain “domestic subsid[ies].” Id. § 1677(5A)(A). “An export subsidy is a subsidy that is, in law or in fact, contingent upon export performance, alone or as [one] of [two] or more conditions.” Id. § 1677(5A)(B); see 19 C.F.R. § 351.514(a) (explaining that “a subsidy” is “contingent upon export performance if the provision of the subsidy is, in law or in fact, tied to actual or anticipated exportation or export earnings, alone or as one of two or more conditions”). If Commerce finds, in the course of an investigation or review, that “necessary information is not available on the record” or “an interested party or any other person . . . withholds information that has been requested by [Commerce],” “fails to provide such information by the deadlines . . . or in the form and manner requested,” “significantly impedes a proceeding,” or “provides such information but the information cannot be verified,” then Commerce is permitted to use “facts otherwise available” in making its determinations. 19 U.S.C. § 1677e(a)(2)(A)– (D); see 19 C.F.R. § 351.308 (providing for “[d]eterminations on the basis of facts available”). If Commerce further finds a respondent has “failed to cooperate by not acting to the best of its ability to comply with a request for information,” then it “may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available” (that is, AFA). 19 U.S.C. § 1677e(b); see 19 C.F.R. § 351.308(a) (similar). In selecting AFA, Commerce may use information from the petition, investigation, prior administrative reviews, or “any other Case: 20-1004 Document: 64 Page: 14 Filed: 09/03/2020 14 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES information placed on the record.” 19 U.S.C. § 1677e(b); see id. § 1677e(b)(2) (providing a list of “[p]otential sources of information for adverse inferences”); 19 C.F.R. § 351.308(c) (similar); Gallant Ocean (Thail.) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010) (providing that, “in the case of uncooperative respondents,” Commerce has discretion to “select from a list of secondary sources as a basis for its adverse inferences”). When Commerce “relies on secondary information rather than on information obtained in the course of an investigation or review,” it “shall, to the extent practicable, corroborate that information from independent sources that are reasonably at [its] disposal.” 19 U.S.C. § 1677e(c); see 19 C.F.R. § 351.308(d) (providing for the “[c]orroboration of secondary information” “to the extent practicable” and providing a non-exclusive list of “independent sources that are reasonably at [Commerce’s] disposal”). B. Commerce’s Decision to Not Offset Trina’s Export Price Is Contrary to Law In its Final Results, Commerce declined to increase Trina’s export price by the amount countervailed to offset the Ex-Im Bank Buyer Credit Program. J.A. 121. Commerce explained that such an increase was improper because Commerce “did not make a determination in the [companion] CVD investigation . . . that the [Ex-Im Bank] Buyer’s Credit Program was an export subsidy” because it had relied on AFA to countervail the program. J.A. 121. The CIT remanded to Commerce, concluding that “Commerce’s refusal to offset the CVDs imposed is contrary to law because Commerce necessarily determined that the [Ex-Im Bank] [B]uyer’s [C]redit [P]rogram was an export subsidy in the [companion] CVD investigation.” Trina I, 359 F. Supp. 3d at 1337. The CIT “directed [Commerce] to recalculate Trina’s [export] prices to account for the offset[.]” Id. at 1332. On remand, Commerce, “under respectful protest, increased Trina’s [export] price[] by the amount countervailed” as a result of the Ex-Im Bank Buyer’s Credit Case: 20-1004 Document: 64 Page: 15 Filed: 09/03/2020 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES 15 Program. J.A. 6764–65. The CIT sustained Commerce’s Remand Redetermination. Trina II, 393 F. Supp. 3d at 1251. SolarWorld asserts that “[t]he CIT erred in ordering Commerce to offset Trina’s [export] price to account for the countervailed Ex-Im [Bank] Buyer’s Credit Program,” Appellant’s Br. 17, and in “sustaining Commerce’s decision [as] made under protest,” id. at 19. 4 We disagree with SolarWorld. Commerce’s decision to not increase Trina’s export price by the amount countervailed for the Ex-Im Bank Buyer’s Credit Program is contrary to law. Where, as here, merchandise is subject to both antidumping and countervailing duties during the period of review, Commerce “shall,” when calculating a respondent’s antidumping duty rate, “increase[]” the respondent’s “export price” or “constructed export price” by “the amount of any countervailing duty imposed . . . to offset an export subsidy[.]” 19 U.S.C. § 1677a(c)(1)(C); see AD and CVD Orders, 80 Fed. Reg. at 8,592 (providing that Trina’s merchandise is subject to antidumping and countervailing duties). As such, when calculating Trina’s antidumping duty rate, Commerce was required to increase Trina’s export price by any countervailing duty imposed in the companion CVD investigation to offset an export subsidy. See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998) (explaining that “shall” generally creates “an obligation impervious to judicial discretion” (citing Anderson v. Yungkau, 329 U.S. 482, 485 (1947))). 4 While Commerce issued its Remand Redetermina- tion under respectful protest, J.A. 6764–70; see Viraj, 343 F.3d at 1376 (providing that the Government may appeal Commerce’s determinations made under protest), the Government does “not appeal” the CIT’s reversal of this policy and “do[es] not address the issue substantively in [its] brief,” Gov’t’s Br. 7 n.1. Case: 20-1004 Document: 64 Page: 16 Filed: 09/03/2020 16 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES Here, Commerce failed to increase Trina’s export price by a countervailing duty imposed to offset an export subsidy. In the companion CVD investigation, Commerce first determined that the Ex-Im Bank Buyer’s Credit Program was countervailable as an export subsidy. Commerce described the program as providing “[e]xport [c]redit [s]ubsidies,” explaining that “[t]hrough th[e] program, the [Ex-Im Bank] provides loans at preferential rates for the purchase of exported goods from the PRC.” Final CVD I&D Mem. 30; see 19 U.S.C. § 1677(5A)(B) (“An export subsidy is a subsidy that is, in law or in fact, contingent upon export performance, alone or as [one] of [two] or more conditions.”). Next, “[un]able to verify [Trina’s] reported nonuse of [the program],” Commerce resorted to AFA to determine that Trina had “used [the] program during the [period of investigation].” Final CVD I&D Mem. 30. Commerce, accordingly, imposed a countervailing duty on Trina’s merchandise to offset the Ex-Im Bank Buyer’s Credit Program. See id. at 16. Having determined that the Ex-Im Bank Buyer’s Credit Program was an export subsidy and imposed a countervailing duty on Trina’s merchandise as a result, Commerce was required to increase Trina’s export price by the offset. Commerce’s decision to do otherwise was contrary to law. See 19 U.S.C. § 1677a(c)(1)(C) (providing that a respondent’s “export price shall be[] increased by . . . the amount of any countervailing duty imposed on the subject merchandise . . . to offset an export subsidy”); Kyocera Solar, 844 F.3d at 1338 (explaining that, where “‘Congress has directly spoken to the precise question at issue[,]’ . . . our inquiry ends, for we ‘give effect to the unambiguously expressed intent of Congress.’” (quoting Chevron, 467 U.S. at 842–43)). Commerce’s reasoning that, because its “determination to countervail the [Ex-Im Bank Buyer’s Credit Program] was based on [AFA],” it “[had] not” actually “ma[d]e a determination that the program . . . was [an export subsidy]” and, therefore, was not required to offset it, J.A. 121–22, is Case: 20-1004 Document: 64 Page: 17 Filed: 09/03/2020 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES 17 incorrect. AFA allows Commerce to “reach[]” a “determination” on an incomplete record. 19 U.S.C. § 1677e(a); see id. § 1677e(b)(2) (providing “[p]otential sources of information for adverse inferences”). It does not obviate Commerce’s obligation to make “the applicable determination.” Id. § 1677e(a); see id. § 1671(a)(1) (providing that Commerce must “determine[] that” an exporter or producer is receiving “a countervailable subsidy” before imposing countervailing duties). Nor does it obviate Commerce’s obligation to support any such determinations “[with] substantial evidence.” Id. § 1516a(b)(1)(B)(i); see id. § 1677e(c) (requiring that Commerce, “to the extent practicable, corroborate that information from independent sources that are reasonably at their disposal”); Gallant Ocean, 602 F.3d at 1325 (vacating and remanding Commerce’s AFA duty rate calculation as unsupported by substantial evidence); Dongguan Sunrise Furniture Co. v. United States, 931 F. Supp. 2d 1346, 1350 (Ct. Int’l Trade 2013) (“[E]ven an AFA rate must be supported by substantial evidence.” (citation omitted)). Before imposing a countervailing duty, Commerce must necessarily determine that a subsidy is “specific”—that it is an “export subsidy,” “import substitution subsidy,” or a “[d]omestic subsidy” meeting certain requirements, 19 U.S.C. § 1677(5A)—even if it must use AFA to do so, id. § 1677e (providing that Commerce may “use the facts otherwise available in reaching the applicable determination”). Otherwise, Commerce cannot impose a countervailing duty to offset that subsidy. Id. §§ 1671(a)(1) (providing that Commerce may impose countervailing duties only where it “determines that the government of a country or any public entity within the territory of a country is providing, directly or indirectly, a countervailable subsidy”), 1677(5)(A) (providing that, to be countervailable, a subsidy must be “specific”). Accordingly, Commerce’s decision to not offset Trina’s export price, based on its reliance on AFA to countervail the Ex-Im Bank Buyer’s Credit Program, is contrary to law. Case: 20-1004 Document: 64 Page: 18 Filed: 09/03/2020 18 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES SolarWorld’s counterarguments are unpersuasive. First, SolarWorld argues that, because the term “export subsidy” in 19 U.S.C. § 1677a(c)(1)(C) is ambiguous, the CIT should have deferred to Commerce’s reasonable interpretation of that term—that “export subsidy . . . exclude[s] AFA determinations[.]” Appellant’s Br. 26 (capitalization normalized). This argument is without merit. The term “export subsidy” is not ambiguous as to whether it includes determinations made using AFA. On its face, it covers all export subsidy determinations. See 19 U.S.C. § 1677(5A)(B) (defining “export subsidy” as “a subsidy that is, in law or in fact, contingent upon export performance, alone or as [one] of [two] or more conditions”). Moreover, Commerce did not offer an interpretation of “export subsidy” in either its Final Results, see J.A. 121–22, or its Remand Redetermination, see J.A. 6764–70. Commerce concluded only that, by resorting to AFA, it “[had] not determine[d]” whether “the subsidies in question were export subsidies” within the statutory definition and “as required for an offset under [19 U.S.C. § 1677a(c)(1)(C)].” J.A. 121– 22; see J.A. 122 n.16 (quoting 19 U.S.C. § 1677(5A)(B) without comment). At best, SolarWorld’s argued interpretation of “export subsidy” comes from the Government’s briefing before the CIT. See Def.’s Resp. Br. Opp’n Rule 56.2 Mots. J. Agency R. at 23–25, Changzhou Trina Solar Energy Co. v. United States, CIT Consol. No. 17-cv-00199-CRK (June 7, 2018), ECF No. 38 (arguing that, because the term “export subsidy” is ambiguous and “does not require that Trina’s [export] price be adjusted,” Commerce’s “interpretation” of 19 U.S.C. § 1677a(c)(1)(C) should be deferred to as “reasonable”). Even if the term “export subsidy” were ambiguous, see 19 U.S.C. § 1677(5A)(B) (expressly defining “export subsidy”), we do not apply Chevron “to an agency counsel’s interpretation of a statute,” much less a defendant-intervenor’s, “where the agency itself has articulated no position on the question,” Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212 (1988). Case: 20-1004 Document: 64 Page: 19 Filed: 09/03/2020 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES 19 Second, SolarWorld argues that we should give Auer deference to Commerce’s interpretation of the Final CVD I&D Mem.—erroneously calling it the “CVD Order”—as “apply[ing] AFA in finding the Ex-Im [Bank] Buyer’s Credit Program was an export subsidy.” Appellant’s Br. 20 (citing Auer v. Robbins, 519 U.S. 452, 461 (1997); Diamond Sawblades Mfrs. Coal. v. Hyosung D&P Co., 809 F.3d 626, 630 (Fed Cir. 2015)). This argument is irrelevant. Here, as SolarWorld concedes, Commerce has determined that the Ex-Im Bank Buyer’s Credit Program was an “[e]xport[] . . . [s]ubsid[y],” because it “provides loans at preferential rates for the purchase of exported goods from the PRC.” Final CVD I&D Mem. 30; see Appellant’s Br. 20 (arguing that Commerce “f[ound] the Ex-Im [Bank] Buyer’s Credit Program was an export subsidy” (capitalization normalized)). As discussed above, whether Commerce used AFA to reach that determination is immaterial. See 19 U.S.C. §§ 1671(a)(1), 1677a(c)(1)(C), 1677e(a). Third, SolarWorld argues that “providing . . . an offset would inappropriately reward noncompliance with Commerce’s request for information[]” from the Government of China in the CVD investigation, “eliminating any incentive for the [Government of China] to cooperate in future CVD investigations of this key subsidy program.” Appellant’s Br. 18. SolarWorld neglects the fact that AFA was already applied to increase Trina’s countervailing duty rate. See Final CVD I&D Mem. 16, 94; see also Dupont Teijin Films USA, LP v. United States, 273 F. Supp. 2d 1347, 1349 n.4 (2003) (explaining that “[t]he basic economic theory behind [19 U.S.C. § 1677a(c)(1)(C)]” is that the any “export subsidy” received directly “contribute[s] to lower-priced sales of subject merchandise . . . by the amount of [that] subsidy. The offset is designed to prevent the double application of duties when the subsidies and dumping are related.”). Further, SolarWorld’s argument misapprehends the nature of AFA. See F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) Case: 20-1004 Document: 64 Page: 20 Filed: 09/03/2020 20 CHANGZHOU TRINA SOLAR ENERGY v. UNITED STATES (explaining that AFA “is to provide respondents with an incentive to cooperate, not to impose punitive, aberrational, or uncorroborated margins”). Accordingly, Commerce’s decision to not offset Trina’s export price is contrary to law. See Wheatland Tube, 495 F.3d at 1359 (“If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” (quoting Chevron, 467 U.S. at 842–43)).