Two-Ply Panels Subject to AD/CV Duties on Chinese Hardwood Plywood, Commerce Says

Panels need only two layers of veneer to be subject to antidumping and countervailing duties on hardwood plywood from China (A-570-051/C-570-052), the Commerce Department said in a preliminary scope ruling issued Aug. 26. Chinese two-ply panels processed into plywood in Vietnam by adding face and back veneers, then exported by Finewood Company Limited, a Vietnamese exporter implicated in an Enforce and Protect Act evasion investigation, are still of Chinese origin after the processing and are covered by AD/CV duties, Commerce said. Comments are due on or about Sept. 15.

The scope of the orders on Chinese hardwood plywood covers “hardwood and decorative plywood, and certain veneered panels.” While the scope defines hardwood and decorative plywood as “consisting of two or more layers or plies of wood veneers and a core,” it does not define “veneered panels.” Finewood argued that the scope requires three panels to be considered subject merchandise -- two veneers and a core -- but Commerce found that veneered panels are a distinct product covered by the scope, and said the scope language is ambiguous as what is meant by the term.

Commerce looked to the explanatory notes to the tariff schedule, which define veneered panels as “panels consisting of a thin veneer of wood affixed to a base, usually of inferior wood, by gluing under pressure.” Applying that definition, Commerce preliminarily found that two-ply panels are “veneered panels” under the scope of the AD/CVD orders on hardwood plywood, and that, as exported from China to Vietnam, Finewood’s two-ply panels are subject to AD/CV duties.

Commerce then turned to a substantial transformation analysis to determine whether the processing of the two-ply panels in Vietnam by adding back and face veneers means the country of origin is Vietnam, not China, which would render the plywood outside the scope of the AD/CVD orders. It found no substantial transformation occurs in Vietnam, and the country of origin of the merchandise remains the country where the two-ply panels were produced, i.e., China.

First, the Chinese two-ply panels, by virtue of their gluing and assembly process, have the same essential character of the plywood exported from Vietnam, Commerce said. And the processing in Vietnam, as well as the value added in Vietnam, are less intensive and significant than the processing and value added in China, respectively. The level of investment in China is also more intensive, and the goods remain the same class or kind of merchandise after processing. As the two-ply panels imported from China by Finewood are subject to hardwood plywood duties, and they are not substantially transformed in Vietnam by their processing into plywood, the plywood exported from Vietnam retains its Chinese origin and is covered by AD/CV duties, Commerce preliminarily found.