Malaysia Ferrosilicon Exporters Challenge AFA Specificity Finding in CVD Case

The exporters, led by Om Materials, opposed the department’s decision to use adverse facts available to find that capital allowances under Malaysia’s Industrial Building Allowance program were de facto specific to the mandatory respondents. They also took issue with the department’s choice to countervail both a Sarawak government land tax relief program and import duty exemptions under the country's Licensed Manufacturing Warehouse program.

First, Om said, the capital allowances under the Industrial Building Allowance program were offered to all industrial building operators in Malaysia, meaning the program “plainly” wasn’t de facto specific.

And the Malaysian government couldn’t reject qualifying industrial building operators from using the allowance, demonstrating that it “legally cannot administer the [Industrial Building Allowance] in a manner that favors a particular industry or enterprise over others,” Om said. Unable to make an argument for de jure specificity, it said, Commerce therefore turned to de facto specificity -- but solely on the basis of AFA, as the record didn’t show that the program’s users were limited in number.

Commerce applied AFA to the respondents for the Malaysian government's failure to provide it a table of all the users of the subsidy “and the amount ‘approved’” under the program. But the government didn’t keep track of that, Om said. Operators self-claim allowances under the program when filing their taxes, it said, and receive them automatically if they meet the legal criteria.

“The lack of an ‘approval’ process for the IBA program was an uncontroverted fact on the record, and a fact that the [Malaysian government] repeatedly emphasized in its responses to Commerce,” it said.

Even if the Malaysian government had withheld information, Commerce should have used facts available, not adverse facts available, it claimed. The department only conducted the former analysis in its final determination, it said.

Regarding the Sarawak government land tax relief program, Om said Commerce wrongly found that “‘land rent’ paid by [Om] was a tax” solely because it didn’t have any evidence that Malaysia considered “quit rent to be the equivalent of a land tax.” But the record showed otherwise, it said.

Commerce requested clarification on whether Sarawak’s land rent was quit rent in a government questionnaire issued after the investigation’s preliminary determination, Om said. In its response, the Malaysian government said directly that the land rent was quit rent, following that up with an explanation of Sarawak’s code, the exporter said.

As a result, Commerce should have treated the rent as a tax rather than “a provision of a good,” it said.

Commerce also was wrong to countervail import duty exemptions provided to the mandatory respondents for inputs used in the production of exported ferrosilicon under Malaysia’s Licensed Manufacturing Warehouse program, Om said.

Despite the department’s claim otherwise, the record showed that Malaysia could track Om’s imports and identify those used in its exported merchandise, it said. Om said it provided the Malaysian government “independently-audited compliance reports” allowing for the tracking of inputs. Malaysia also “manually inspects” producers’ import and export documentation and compares it to these compliance reports, it said.