                                      Slip Op. 20-

               UNITED STATES COURT OF INTERNATIONAL TRADE

  JIANGSU ZHONGJI LAMINATION
  MATERIALS CO., LTD., SHANTOU WANSHUN
  PACKAGE MATERIAL STOCK CO., LTD.,
  JIANGSU HUAFENG ALUMINUM INDUSTRY
  CO., LTD., and JIANGSU ZHONGJI
  LAMINATION MATERIALS CO., (HK) LTD.,                      Before: Jane A. Restani, Judge

                       Plaintiffs,
                                                             Court No. 18-00089
                 v.

  UNITED STATES,

                       Defendant,

                 and

  ALUMINUM ASSOCIATION TRADE
  ENFORCEMENT WORKING GROUP AND ITS
  INDIVIDUAL MEMBERS, JW ALUMINUM
  COMPANY, NOVELIS CORPORATION, and
  REYNOLDS CONSUMER PRODUCTS LLC,

                       Defendant-Intervenors.


                                        OPINION

[Commerce’s Final Results of Redetermination Pursuant to Court Order are sustained. Judgment
entered.]

                                                                      Dated: March 24, 2020

       Jeffrey S. Grimson, Bryan P. Cenko, James C. Beaty, Jill A. Cramer, Kristin H. Mowry,
and Sarah M. Wyss, Mowry & Grimson, PLLC, of Washington, D.C., for Plaintiffs Jiangsu
Zhongji Lamination Materials Co., Ltd., Shanton Wanshun Package Material Stock Co., Ltd.,
Jiangsu Huafeng Aluminum Industry Co., Ltd., and Jiangsu Zhongji Lamination Materials Co.,
(HK) Ltd.

       Aimee Lee, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of New York, N.Y., for the defendant. Of counsel was Paul K. Keith,
Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
Court No. 18-00089                                                                           Page 2


of Commerce, of Washington, D.C.

      John M. Herrmann, II, Grace W. Kim, Joshua R. Morey, Kathleen W. Cannon, and Paul
C. Rosenthal, Kelley Drye & Warren, LLP, of Washington, D.C., for Defendant-Intervenors
Aluminum Association Trade Enforcement Working Group and its Individual Members, JW
Aluminum Company, Novelis Corporation, and Reynolds Consumer Products LLC.

       Restani, Judge: This matter is before the court following a remand to the Department of

Commerce (“Commerce”) in Jiangsu Zhongji Lamination Materials Co., Ltd. v. United States, 405

F. Supp. 3d 1317 (CIT 2019) (“Jiangsu”), with which familiarity is presumed. In Jiangsu, the court

upheld Commerce’s determination that Plaintiff Jiangsu Zhongji Lamination Materials Co., Ltd.

(“Zhongji”) and its affiliated companies, Plaintiffs Shantou Wanshun Package Material Stock Co.,

Ltd. (“Shantou Wanshun”), Jiangsu Huafeng Aluminum Industry Co., Ltd. (“Jiangsu Huafeng”),

and Jiangsu Zhongji Lamination Materials Co., (HK) Ltd. (“Zhongji HK”) received a

countervailable electricity subsidy as supported by substantial evidence; concluded that

Commerce’s selection and calculation of the electricity benchmark was consistent with its

regulations and in accordance with law; and that substantial evidence supported Commerce’s (1)

application of an adverse inference based upon facts otherwise available (“AFA”) to find that the

Government of China’s (“GOC”) electricity program is specific, (2) decision to calculate an ocean

freight benchmark based solely on actual price quotes sourced from Maersk, (3) application of

AFA to countervail Zhongji’s self-reported “other subsidies,” and (4) determination that Zhongji

received a countervailable subsidy pursuant to certain of its reported policy loans from state owned

commercial banks (“SOCBs”). See Jiangsu, 405 F. Supp. 3d at 1334–45. The court remanded to

Commerce for further explanation of its determinations that Zhongji is not entitled to an Entered

Value Adjustment (“EVA”) and that Zhongji did not establish non-use of the Export-Import Bank

of China’s (“Ex-Im Bank”) Export Buyer’s Credit Program (“EBCP”). See id. at 1345.
Court No. 18-00089                                                                           Page 3


       a. Entered Value Adjustment

       In Jiangsu, the court concluded that Commerce’s denial of Zhongji’s request for an EVA

was unsupported by substantial evidence. Id. at 1331. The court held that although Commerce

preliminarily determined that Zhongji’s sales to the United States met each of Commerce’s six

criteria to qualify for an EVA, it failed to explain adequately its final determination that Zhongji

failed to satisfy one criterion; specifically, that Zhongji HK did not ship the subject merchandise

directly to the United States. Id. at 1327–28 (citing Ball Bearings and Parts Thereof from Thailand:

Final Results of Countervailing Duty Administrative Review, 57 Fed. Reg. 26,646 (Dep’t

Commerce June 15, 1992)). On remand, Commerce has granted Zhongji’s EVA request without

protest. See Final Results of Redetermination Pursuant to Court Order, ECF No. 50-1 at 8 (Jan. 1,

2020) (“Remand Results”). Commerce concedes that “since [it] made an adjustment to all of

Zhongji’s export sales in the Preliminary Determination, it is not clear why Zhongji’s failure to

identify its U.S. sales is grounds for denying the adjustment.” Id. at 6. Commerce suggests that

there may have been a miscommunication between the parties between the preliminary and final

determinations. Id. at 8. Commerce maintains that the way it made the adjustment in the

Preliminary Determination was incorrect, but it reconsidered the EVA methodology between the

preliminary and final determinations. Id. at 7–8. Apparently, Commerce accepts responsibility

for not adequately communicating the change to Zhongji. Id. at 8. Commerce has sufficiently

complied with the court’s remand order and no party challenges Commerce’s decision to grant

Zhongji’s request for an EVA.

       b. Export Buyer’s Credit Program

       In Jiangsu, the court concluded that Commerce’s explanations for applying AFA to find

that Zhongji benefitted from the EBCP failed to satisfy Commerce’s statutory investigative
Court No. 18-00089                                                                           Page 4


requirements. Jiangsu, 405 F. Supp. 3d at 1334. The court found Commerce’s application of AFA

to find that Zhongji, a mandatory cooperating party that submitted uncontroverted affiliate and

customer certifications of non-use, benefitted from the EBCP based on the GOC’s failure to

cooperate to be unsupported by substantial evidence and contrary to law, because Commerce did

not explain why a complete understanding of the EBCP’s operation is necessary to verify non-use

of the program. Id. at 1333.

       On remand, Commerce has accepted Zhongji’s and its customers’ claims of non-use of the

EBCP as sufficient evidence that Zhongji does not benefit from the EBCP. Id. at 13–14.

Commerce makes this concession “under respectful protest.” Id. at 14 & n.45 (citing Viraj Grp.,

Ltd. v. United States, 343 F.3d 1371 (Fed. Cir. 2003)). Unlike Viraj, however, this matter does

not involve a “contrary position forced upon it by the court,” see 343 F.3d at 1376, although it may

require procedures that would lead to such a position. Nor does this case involve a remand order

“with instructions that dictate a certain outcome that is contrary to how Commerce would

otherwise find.” Meridian Prods., LLC v. United States, 890 F.3d 1272, 1276 n.3 (Fed. Cir. 2018).

        As this court has repeatedly explained, where Commerce applies AFA to determine that a

cooperating party benefits from the use of the EBCP solely on the basis of the GOC’s failure to

provide the requested information pursuant to 19 U.S.C. §§ 1677e(a)(2)(B) or 1677e(b), as it did

here, Commerce must (1) identify the gap in the record, (2) establish how the withheld information

creates the gap (e.g., by explaining why the withheld information is necessary to verify the

cooperating party’s claims of non-use), and (3) demonstrate that only the withheld information can

fill the gap by explaining why the record evidence, or other information accessible by respondents,

is insufficient or impossible to verify. See Jiangsu, 405 F. Supp. 3d at 1333 (collecting cases).

The court, therefore, ordered Commerce to “consider what information could be verified that
Court No. 18-00089                                                                         Page 5


would show non-use.” Id. at 1334. The court also ordered all parties “to contemplate a solution

to the impasse and to confer.” Id.

       Commerce insists that it still does not know what information “it should look for in

attempting to determine whether a loan is traceable to the China Ex-Im Bank” for purposes of

ascertaining Zhongji’s claimed non-use of the EBCP. Remand Results, at 13. Commerce

acknowledges that, during remand, Zhongji “proposed three questions that Commerce could ask

the GOC to find a path forward to verification,” and that Zhongji additionally suggested five

questions “that Commerce should issue to Zhongji’s customers relating to the customer’s loans

and lenders,” the answers to which Commerce could verify. 1, 2 Id. at 9–10. Notwithstanding

Zhongji’s apparent good-faith efforts to comply with the court’s remand order, Commerce

maintains that none of Zhongji’s proposed questions remedies “Commerce’s concerns regarding

its inability to verify statements of non-use by Zhongji and its customers.” Id. at 10. In

Commerce’s view, “verification under the circumstances” of this case would be unproductive, and

it is wholly at a loss absent the GOC’s cooperation. Id. at 13. The court’s order, however, was

not for Commerce to verify Zhongji’s non-use of the EBCP, but rather for Commerce to “explain

why a complete understanding of the operation of the program is necessary to verify non-use of

the program” and for all parties to attempt to identify an alternative verification procedure.



1
  Presumably, if the customers did not cooperate, Commerce would have the lack of data allowing
it to proceed to fill in the blanks with data of its choosing. See 19 U.S.C. §§ 1677e(a)–(b).
Commerce did not comment on the efficacy of the specific questions that Zhongji proposed that
Commerce ask its customers.

2
 The court accepts that Commerce is not required to send new questions to the GOC, as Commerce
has reasonably determined that it has not shown full cooperation, having unilaterally decided that
some of Commerce’s questions were irrelevant. See Decision Mem. for the Final Determination
in the Countervailing Duty Investigation of Certain Aluminum Foil from the People’s Republic of
China, C-570-054, POR 1/1/2016-12/31/2016 at 29–31 (Dep’t Commerce Feb. 26, 2018) (“I&D
Memo”).
Court No. 18-00089                                                                              Page 6


Jiangsu, 405 F. Supp. 3d at 1333. Part of Commerce’s task on remand was to collaborate and

confer with Zhongji to ascertain relevant queries, id. at 1334, in aid of identifying what

information, if any, is either “not available on the record,” being withheld, or not verifiable. 19

U.S.C. § 1677e(a). Apparently, it has not attempted to do so.

       At best, Commerce’s current position is that because Zhongji’s customer declarations “do

not cover all of its U.S. sales,” the record is incomplete, 3 so that “Zhongji’s claimed non-use of

the EBCP” is necessarily unverifiable. Remand Results, at 13. But customer declarations are not

the present issue. Zhongji’s questions go well beyond such declarations. Apparently, Commerce’s

true position is that it wishes to rely solely on GOC’s failures. It recognized that the court does

not accept that position and, thus, has in various cases lately interposed non-verifiability or

incompleteness as reasons to maintain the EBCP as contributing to the CVD rates, without much

to back up such stances. Nevertheless, Commerce has now lowered Zhongji’s positive CVD cash

deposit rate by 10.54 percentage points by eliminating the EBCP subsidy portion of the CVD rate.

See Remand Results, at 14.

       Commerce has chosen not to continue this matter by giving respondent a fair opportunity

to prove its case under Commerce’s new view of the program, but rather has simply granted the

relief sought as if compelled to do so by the court. As indicated, the court did not direct this result;

Commerce chose it. The respondent party has filed no comments and apparently has concluded

that this is the most expedient way to finally obtain relief. The domestic parties have also remained




3
 The declarations cover close to all of Zhongji’s U.S. sales. See Mem. of P. & A. in Supp. of Rule
56.2 Mot. for J. on the Agency R. by Pls. Jiangsu Zhongji Lamination Materials Co., Ltd. et al.,
ECF No. 27 at 18 (Dec. 19, 2018) (citing Section III of Zhongji’s Questionnaire Responses, vol. I
§ III, Ex. 12, C.R. 58, 64 (June 12, 2017)). The high percentage of response could constitute
substantial evidence.
Court No. 18-00089                                                                           Page 7


silent. At this point, the court sees no purpose in forcing further action upon parties that do not

desire it.

                                        CONCLUSION

        For the foregoing reasons, Commerce’s Remand Results are SUSTAINED. Judgment will

issue accordingly.

                                                                    /s/Jane A. Restani
                                                                    Jane A. Restani, Judge


Dated: March 24, 2020
       New York, New York
