Rulings, remedies and court proceedings for customs and trade professionals

Commenters Say Aluminum Extrusions AD/CVD Scope 'Overly Broad,' Not Administrable

The current scope of ongoing antidumping and countervailing duty investigations on aluminum extrusions from 15 countries would impose heavy costs on U.S. manufacturers and consumers, and as written would make it nearly impossible for CBP to administer and importers to comply, said a bevy of large multinational corporations and trade associations in comments filed recently filed with the Commerce Department.

TO READ THE FULL STORY
Start A Trial

Including consumer products that contain aluminum extrusions under the scope “will result in provisional tariffs on a tremendous number of consumer products” and “unnecessarily” limit product choices, increase costs, harm U.S. consumers, retailers and employers and “weaken retail supply chains,” the Retail Industry Leaders Association said.

And the scope’s inclusion of an imported product that contains even a single extruded aluminum component would require importers to “trace and report the value of the aluminum extrusion and the country of extrusion,” introduce “unprecedented new requirements for importers and create further administrability challenges for CBP,” RILA said.

The comments came in response to a request in Commerce’s notice initiating the AD/CVD investigations (see 2310300050), where the agency itself said it has some concerns about the scope’s administrability. Among the multitude of products listed as covered by the scope are automotive heating and cooling system components, glass refrigerator shelves, parts for boat lifts, highway and bridge signs, scaffolding, parts of exercise equipment, elevator components, recreational vehicle and trailer parts and boat hulls.

“Whirlpool has significant concerns about the breadth of the proposed scope of these investigations and the unreasonable cost that would result to American manufacturers and their consumers, without any incremental benefit to Petitioners,” the appliance manufacturer said in its comments.

Whirlpool said it uses some imported subassemblies that include a “small percentage” of extruded aluminum parts for incorporation into its home appliances. And even though it doesn’t import aluminum extrusions, the products would be “implicated” by the broad scope. That’s despite the fact that “none of the petitioning companies," including the U.S. Aluminum Extruders Coalition and the United Steelworkers labor union, “produce the finished home appliance subassemblies imported by Whirlpool,” it said.

“Scope clarification is necessary because a finished good that just happens to include aluminum extrusion components is no longer an aluminum extrusion,” Whirlpool said. “Rather, it is a separate class or kind of product, which is evidenced by it entering the United States under a different tariff classification than a piece of extruded aluminum and its use in an entirely different manner than extruded aluminum parts.”

The American Automotive Policy Council, which represents Ford, General Motors and Stellantis, said the scope’s current mandate that only the extruded aluminum portions of a subassembly would be subject to AD/CVD would be impossible for CBP to enforce and difficult for importers to satisfy.

CBP has no way to determine which manufactured parts and subassemblies contain aluminum extrusions, nor can it “isolate and confirm the proper customs value and origin of only the aluminum extrusion” portion of the good, the AAPC said. Meanwhile, suppliers of auto parts are unlikely to give importers "proprietary price and source country data for aluminum extrusions contained within the imported parts,” the automakers said.

“It is not common business practice for an AAPC member to have visibility to Tier 1 supplier pricing information, for example, nor would it be common business practice for a Tier 1 supplier to have visibility to Tier 2 pricing information, and so on to Tier N,” the trade group said in its comments. “Furthermore, there is no existing obligation for a supplier to provide such information to their customer.”

That difficulty for importers “defies all notions of due process and fair play,” the National Customs Brokers & Forwarders Association of America said in its comments. “Failure to provide sufficient guidance and explanation on the scope of the order likely will result in CBP delays, added demurrage charges, and penalties to brokers and/or the importers that they serve.”

Not only does the scope need clarity, but so does the mechanism for how importers and their brokers can separate out the covered and non-covered portions of a given subassembly on entry documentation, the NCBFAA said. The trade group requested that CBP and Commerce “collaborate and provide specific explanation on how this information is to be reported” in ACE and on CBP Form 7501, “especially if CBP expects certain materials or components of imported products to be broken out for ADD/CVD,” the NCBFAA said.

Requiring breakouts of the portion of each subassembly that is made of aluminum extrusions “is nearly impossible to implement in a compliant manner and does not comport with other CBP classification, origin and valuation legal requirements,” the NCBFAA said.

Commenters also questioned the legality under U.S. AD/CVD laws and regulations of Commerce’s investigation under the broad scope.

The U.S. Aluminum Extruders Coalition and the United Steelworkers labor union “grossly overreached in including a huge laundry list of products covered by the petitions, including countless products that are not aluminum extrusions but are instead substantially transformed downstream products,” said the Downstream Industry Coalition, which comprises AutoZone, Bracalente, Brunswick, Daikin Applied, Daikin Comfort, Danfoss, Dell, Johnson Controls, Modine and Streamlight.

“Nowhere in U.S. law is Commerce authorized to impose AD/CVD duties on an input to merchandise that is sold and imported. Nor does U.S. law allow Commerce to impose AD/CVD duties on not only the merchandise that is the subject of the investigations, but also on all downstream products manufactured from the target merchandise itself,” the coalition said. The downstream products being imported have been substantially transformed, and are no longer an aluminum extrusion, it said.

“Commerce must ensure that the scope language is only as broad as the product for which it found Petitioners to have standing,” Target General Merchandise said in comments mirrored by Moen and the National Marine Manufacturers Association and Lilli Pad, as well as Home Depot. “Here, downstream products containing extrusions are not those for which Petitioners proved their standing to bring the case and for which the ITC conducted its preliminary phase investigation.”

The inclusion of downstream products in the scope means the industry support calculation that Commerce conducted to determine whether to initiate the investigations was skewed, the companies said. “This purported industry support calculation did not include in the denominator any production of downstream products. To have standing, the scope of a petition must represent the merchandise produced or capable of being produced by the domestic industry seeking relief."

The imposition of duties on downstream products also eliminates any ability for many importers to participate in any AD/CVD proceedings related to aluminum extrusions, the companies said.

“By applying duties (even in part) on downstream products, Commerce will deprive exporters of downstream products that contain aluminum extrusions of the ability to seek respondent status” in the AD/CVD investigations, they said. They added that exporters of downstream products have no sales of aluminum extrusions to report on separate rate applications or in U.S. sales databases.

Sellers of downstream products containing aluminum extrusions also won’t be able to adjust their pricing to ensure they aren’t dumping, “frustrating the remedial purpose of the antidumping law in particular by making it impossible for an importer to ensure its goods are fairly priced,” the companies said.

Finally, because there won’t be any sale of the actual aluminum extrusions between a downstream product exporter and a U.S. importer, there won’t be any sales upon which to request an administrative review, Target said. The scope "[shuts] the door to all of the normal procedures for seeking review and revision of cash deposit rates and assessment rate,” the companies said.

Rebuttal comments, including from the USW labor union and the U.S. Aluminum Extruders Coalition, are currently due Nov. 30, though the two petitioners have requested an extension until Dec. 7 due to the “extremely large number of scope comments that were filed.”