CBP Announces Several New EAPA Investigations

CBP's Trade Remedy and Law Enforcement Directorate is investigating several new cases of alleged antidumping duty evasion under the Enforce and Protect Act (EAPA) evasion enforcement process (see 1608190014), CBP said in an Aug. 17 news release. The agency announced new investigations into possible evasion of AD duty orders on wooden bedroom furniture (WBF) and steel wire hangers. CBP also announced an investigation into alleged evasion of a diamond sawblades AD order. The Diamond Sawblades Manufacturers' Coalition, which filed the allegation, previously announced the investigation (see 1706280035).

CBP is looking at eight new allegations that were filed by M&B Metals, which filed similar allegations against another company and led to the first final determination by CBP under EAPA (see 1708170027). The company filed the allegations "as a result of the successful impact from the enforcement effort in this first investigation," CBP said. The agency issued a consolidated notice "for the decision on interim measures in those investigations, finding a reasonable suspicion of the importation [of] wire hangers through evasion," CBP said. "This was a complex and coordinated scheme, attempting to evade the antidumping duty order by transshipping wire hangers through Malaysia to the United States."

The allegations name Brooklyn Knights Trading of Philadelphia; GL Paper Distribution of Miami; Garment Cover Supply of Orlando; Newtown Supply NY of Woodside, New York; Casa USA of Carson, California; Subcos Percha De Metal Factory of Rosemead, California; Nice Guy Trading of New York; and Masterpiece Supply of San Francisco. M&B Metals provided data in the allegation to CBP that showed imports of hangers from Malaysia has grown significantly in recent years while imports of hangers from China have dropped sharply during the same period. The alleger also "commissioned foreign market research in Malaysia, including both the collection of corporate information and physical inspection of reported business locations," CBP said. "According to M&B Metal, the fact none of the Malaysian companies its foreign market researcher visited existed was further proof that the companies were not legitimately engaged in the physical production of hangers."

CBP issued Customs Form 28 to each of the companies in May and conducted site visits in Malaysia in July, it said. "In short, CBP discovered that none of the manufacturers existed at any of the addresses listed in the official registration documents, financial statements, or the CF28 responses," CBP said. "The addresses were either occupied by other businesses, did not exist at all, or in one case had been an empty lot before construction of a new building began on the lot in June 2017."

CBP said it will require "interim measures," meaning entries from any of the companies under investigation that entered the U.S. as not subject to AD duties have been rate-adjusted, CBP said. The agency will also require "live entry" on future imports from those companies "reject any entry summaries and require a refile for those that are within the entry summary reject period; suspend the liquidation for any entry that has entered on or after May 12, 2017, the date of initiation of these investigations; as well as extend the period for liquidation for all unliquidated entries that entered before that date."

The investigations "on wire hangers have resulted in CBP preventing evasion of more than $33 million in unpaid antidumping duties annually,” CBP Acting Commissioner Kevin McAleenan said in the CBP release. “CBP continues to make trade enforcement one of our top priorities, fully utilizing all tools that Congress has provided us, such as EAPA investigative authorities provided for in the Trade Facilitation and Trade Enforcement Act. This is a tremendous example of how a strong allegation from the trade enabled CBP to stop evasion and protect American jobs.” A CBP official recently said use of evasion allegations under EAPA have begun to increase (see 1705260007).

While such investigations can be costly, the EAPA process is important for domestic industry, M&B President Milton Magnus said in an email. "There is rampant evasion in the Wire Garment Hanger industry as proven by the allegation against Thailand and now Malaysia," he said. "Before we file an EAPA allegation, we investigate it thoroughly." The process is "time consuming, and expensive for a small company, but one that is vital to our future. EAPA has allowed us to properly bring allegations to CBP, and then it gives them the process in which to investigate," Magnus said. "I highly recommend using EAPA where a domestic industry is fairly certain, that it is being harmed by duty evasion." Asked about whether additional allegations are to come, Magnus said "M&B cannot comment whether we have any ongoing investigations."

Wooden Bedroom Furniture Investigation

CBP also is investigating Aspects Furniture International over possible antidumping duty evasions, the agency said in its notice to the company. The investigation follows allegations submitted by the American Furniture Manufacturers Committee for Legal Trade (AFMC), though CBP said it was already looking at the company's entries for possible evasions. "Because evidence establishes a reasonable suspicion that Aspects has entered merchandise into the United States through evasion, CBP has taken" interim measures, CBP said.

CBP began the investigation under EAPA on May 9 after the AFMC "alleged that Aspects is misreporting the identities of the actual producers" of wooden bedroom furniture (WBF) to avoid paying AD duties, the agency said. "This suggestion is supported by statements from one of the Chinese manufacturers that shipped merchandise to Aspects, which admitted, during a Commerce administrative review in 2015, that although it exported WBF to the United States, it was not likely identified as the exporter on entry summaries," CBP said. So far, "CBP has identified two Aspect entries, filed as type 01 instead of 03, with undeclared merchandise (six misdescribed invoice items) subject to AD order A-570-890 on WBF from China," the agency said.

Senate Finance Committee ranking member Ron Wyden, D-Ore., who wrote the EAPA provisions, celebrated CBP's announcements. “We are seeing concrete results of the new trade enforcement tools I created to prevent bad actors from undermining our workers and manufacturers," he said. "These tools let CBP act quickly to stop merchandise laundering and other illegal trade activity in its tracks. Even before an investigation is complete, once it finds that there is a likely violation, CBP has the authority to put in place interim measures to protect U.S. businesses. I encourage CBP to continue its aggressive pursuit of these cases.”