CIT Sustains Commerce Flip to Negative AD/CVD Circumvention Ruling for Hardwood Plywood

The Commerce Department properly found that Shelter Forest International Acquisition's hardwood plywood exports were not later-developed merchandise and therefore did not circumvent the antidumping and countervailing duty orders on hardwood plywood from China, the Court of International Trade said in a July 21 opinion. After initially finding that Shelter Forest's plywood exports were circumventing the orders, Commerce flipped its determination after an initial CIT remand.

The case concerns an anti-circumvention inquiry on hardwood plywood that (1) had face and back veneers of radiata or agathis pine, (2) had a Toxic Substances Control Act or California Air Resources Board label certifying compliance with TSCA/CARB requirements, and (3) was made with a resin, the majority of which is composed of urea-formaldehyde, polyvinyl acetate or soy (see 2105110035). Commerce initially held that Shelter Forest's plywood, though made before the orders were issued, were made with glue wasn't primarily made with urea-formaldehyde, rejecting a letter from the exporter that contained evidence to the contrary.

In its initial remand, CIT ordered Commerce to reconsider the letter, after which Commerce found that Shelter Forest did sell goods that met the characteristics of goods subject to the inquiry prior to the AD/CVD orders, resulting in a finding of no AD/CVD circumvention. The Coalition for Fair Trade in Hardwood Plywood took issue with Commerce's new finding on two grounds: that Commerce failed to properly consider contradictory evidence as to the composition of the glue used by Shelter Forest and that a component of Shelter Forest's glue was considered a trade secret during the investigation, making it unable to be deemed "commercially available" and therefore later-developed (see 2106080039).

The coalition argued that Shelter Forest's glue recipe used in its pre-order plywood didn't match the glue of the allegedly circumventing merchandise because it didn't contain melamine. The court found that sufficient evidence existed to support Commerce's determination that Shelter Forest's pre-order plywood products used a majority urea-formaldehyde glue. The coalition also said that in its marketing materials, Shelter Forest did not list its plywood as having a water-boil proof (WBP) rating -- a mark obtained when melamine is added to the glue. Commerce ignored this evidence when finding that Shelter Forest added melamine to the glue, the coalition said (see 2106170038).."The Coalition’s assertions regarding Shelter Forest’s marketing materials do not undermine the reasonableness of Commerce’s factual findings, which are supported by ample evidence on the record," Commerce said.

"Nothing of record indicates that melamine is essential to the pertinent inquiry and its addition in the production process is not required to be public knowledge for the merchandise to be found to be commercially available," the court said. "The trade secret status of one component of the inquiry merchandise has no bearing on whether it was actually “present in the market” because the proprietary nature of this particular component appears irrelevant to the question at hand."

(Shelter Forest International Acquisition, Inc. et al. v. U.S., Slip Op. 21-90, CIT # 19-00212, dated 07/21/21, Judge Restani. Attorneys: Daniel Porter of Curtis Mallet-Prevost for plaintiff Shelter Forest; Timothy Brightbill of Wiley Rein for Coalition for Fair Trade in Hardwood Plywood; Sonia Orfield for defendant U.S. government)