Rulings, remedies and court proceedings for customs and trade professionals

Commerce's Anti-Circ Inquiry on Hardwood Plywood Violated Prior Scope Rulings, Parties Argue in 19 Cases

Groups of exporters and importers filed complaints in 19 separate cases this week challenging the Commerce Department's anti-circumvention inquiry concerning the antidumping and countervailing duty orders on hardwood plywood products from China covering exports from Vietnam.

Start A Trial

In the review, Commerce addressed products made under the following five different production scenarios: "(1) face/back veneers and assembled core components (e.g., veneer core platforms) manufactured in China; (2) fully assembled veneer core platforms manufactured in China and face/back veneer produced in Vietnam or third countries; (3) multi-ply panels of glued core veneers manufactured in China and combined in Vietnam to produce veneer core platforms and combined with either face and/or back veneer produced in China, Vietnam, or a third country; (4) face/back veneers and individual core veneers produced in China; and (5) individual core veneers manufactured in China and processed into a veneer core platform in Vietnam and combined with face/back veneer produced in Vietnam or a third country."

The agency also conducted a concurrent scope inquiry and ultimately found that the first three production scenarios were not covered by the scope of the orders. Commerce pointed to the Court of International Trade's order in Vietnam Finewood Co. v. United States, in which the court said that two-ply panels from China weren't subject to the orders since the scope "unambiguously covers products of three or more plies." However, the companies said that the agency "pivoted to reach the exact same outcome for a new reason."

Commerce revised its decision to find that products made under all five production scenarios circumvented the order, reasoning that "more of the production process for scenarios one, two, and three occur in China." In one case, led by Hardwoods Specialty Products USLP, the companies said that "Commerce therefore worked backwards from its original circumvention finding with respect to scenarios four and five to sweep in scenarios one to three."

In the review, Commerce used adverse facts available against 37 companies, finding that they all made hardwood plywood under all five of the production scenarios. While originally using AFA against exporters An An Plywood Joint Stock Company and Greatwood Hung Yen Joint Stock Company, the agency reversed course and removed the AFA designation for them.

The 19 cases make a series of claims against Commerce, including accusing the agency of offering an affirmative circumvention finding unsupported by substantial evidence since its decision "relied on stale information from an entirely separate proceeding (in the earlier scope ruling on Finewood) that was later overturned by this Court and reversed on remand by Commerce." The agency also "relied on a mere scintilla of evidence, including a flawed affidavit from Petitioner and Chinese export data, to find that inquiry merchandise is of the same class or kind of merchandise as the hardwood plywood subject to the Orders," Hardwoods Specialty Products' complaint said.

Many of the companies objected to the use of AFA on them, claiming that Commerce failed to provide a reasonable explanation for the use of the designation, especially in light of reasonable explanations as to why the companies were unable to participate in verification.