Commerce Improperly Found 2-Ply to Be in Scope of Plywood AD/CVD Orders, Complaint Says at CIT

A Commerce Department scope ruling improperly found two-ply hardwood plywood falls under the antidumping duty and countervailing duty orders on hardwood plywood from China because the scope language clearly says that subject merchandise consists of a minimum of three plies, said three companies, Vietnam Finewood, Far East American and Liberty Woods, in a Feb. 18 complaint at the Court of International Trade (Vietnam Finewood Company Ltd. v. U.S., CIT #22-00049).

Commerce imposed the AD/CVD orders in January 2018. In August of that year, CBP opened an Enforce and Protect Act investigation to see whether FEA, Liberty and three other importers evaded the orders by bringing in Finewood-made products from Vietnam. Commerce then initiated a scope inquiry based on a referral from CBP, though Commerce said in the initiation notice that it was "self-initiated."

CBP's scope referral said that Finewood made finished plywood in China, but outsourced some of the Chinese veneer to trollers in Vietnam to develop the Chinese cores, the plaintiffs said. The trio claims that CBP began unlawfully liquidating the FEA's and Liberty's entries of Finewood's plywood with AD/CVD of 206% even while the cash deposit rate was zero. In the final scope ruling, Commerce said the scope of the orders covers the two-ply wood.

Commerce said that the orders cover hardwood and decorative plywood and certain veneered panels. The scope language does not define "certain veneered panels," but it does say that multilayered plywood or other veneered panels must have two or more layers or plies of wood veneers and a core, the plaintiffs said. Nevertheless, Commerce said that the scope language was ambiguous and looked to the (k)(1) factors, ultimately finding two-ply hardwood to be in the scope of the orders.

"Commerce’s conclusion that two-ply is covered by the Orders is not reasonable in light of the clear scope language defining the subject merchandise as consisting of a minimum of three plies," the complaint said. "... Commerce cannot issue an interpretation that changes the scope of the order nor 'interpret an order in a manner contrary to its terms.'" The plaintiffs also said that Commerce "unlawfully rejected" evidence from the original investigation in its analysis of the (k)(1) factors that show that the investigation was not intended to cover two-ply.