Hardwood Plywood Importers Says CBP Improperly Found AD/CVD Evasion

CBP illegally found that importers American Pacific Plywood Inc. (APPI), Far East American and Liberty Woods International evaded the antidumping and countervailing duty orders on hardwood plywood from China by transshipping their goods through Vietnam, the importers argued in two July 20 complaints at the Court of International Trade. The importers' six- and 10-count complaints against CBP over its Enforce and Protect Act investigation include claims the agency illegally initiated the investigation, violated the importers' due process rights and improperly found that all of its imports were covered merchandise (Far East American v. United States, CIT #22-00213) (American Pacific Plywood Inc. v. U.S., CIT #22-00214).

CBP's Trade Remedy and Law Enforcement Directorate (TRLED) initiated the investigation following an allegation from Plywood Source that APPI, incorrectly identified as Costco Star International, and four other importers were evading the AD/CVD orders. Plywood Source said the importers were transshipping Chinese-origin hardwood plywood through Vietnam Finewood Company Ltd. A few months after a site visit to Finewood, CBP issued a redacted notice of initiation to the importers.

The notice relied on two videos given by Plywood Source. One video shows workers offloading crates believed to be plywood from China while the other shows prepackaged but unidentified product also believed to be plywood from China. CBP failed to independently verify the videos, later finding in its appeal determination that the documents don't provide any evidence of transshipment or against Finewood's production capacity. "CBP, therefore, had no credible, unbiased, and independently verified information that reasonably suggested that APPI evaded the Orders," the complaint said. "As such, CBP’s determination to initiate an EAPA investigation against APPI was unsupported by reasonable evidence ... and should be terminated ab initio."

During the investigation itself, the importers and Finewood provided production records for each shipment of hardwood plywood imported during the investigation period, requisition materials, receipts of materials used and stock out records for core platforms and front/back veneers, the brief said. CBP and its Regulatory Audit and Agency Advisory Services (RAAAS) conducted an audit of the information following an on-site verification, finding that no discrepancies were found during the verification of the production and sales documents. APPI said no evidence was found of transshipment, but just that Finewood brought in Chinese origin two-ply core platforms -- an input in the finished hardwood plywood.

Later in the case, CBP referred a scope issue to the Commerce Department, staying CBP's deadline to issue an evasion finding. Commerce looked at whether Chinese-made two-ply and hardwood plywood made with this two-ply were within the scope of the orders. The agency found the further processing of the Chinese-made two-ply into hardwood plywood did not substantially transform the two-ply, making it subject to the orders. CBP then found that the importers evaded the orders, but noted some products made by Finewood weren't within the scope of the orders but there was no way to differentiate the products.

APPI said that CBP's finding that all of its imports from Finewood were covered merchandise was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law and unsupported by substantial evidence." Hardwood plywood made in Vietnam without Chinese two-ply isn't subject to the duties, the brief said.

APPI claimed that CBP violated its due process rights by not giving it access to any of CBP's unredacted determinations or documents nor to public summaries of the redacted information. The importer further said CBP failed to comply with all the EAPA procedures in the state by not releasing its evasion finding within 300 calendar days after the start of the investigation, even after factoring in a 37-day tolling period due to a government shutdown and a 60-day CBP extension.

"CBP’s delay in making its Evasion Determination in a timely manner ... caused substantially prejudice to APPI via the continuation of the interim measures beyond CBP’s statutory deadline for CBP making its final evasion decision based on substantial evidence, not reasonable suspicion," the complaint said. "It was also during this extended period when CBP unlawfully liquidated most of APPI’s entries ... . These unlawful liquidations rate-advanced APPI’s entries to the 206% rate for merchandise covered by the Orders notwithstanding that APPI’s imported hardwood plywood had yet to be determined 'covered merchandise' under the EAPA. The EAPA statute as drafted is designed to avoid such prejudice by requiring timely and transparent adjudication of an EAPA case."

Far East and Liberty Woods' complaint included more gripes against CBP than APPI's complaint did, alleging that CBP failed to both tell Commerce of its evasion finding and request specific assessment rates from Commerce. Far East and Liberty Woods' due process claims also went farther than APPI's, with the plaintiffs claiming that CBP's failure to make the full, unredacted confidential information available to the importers was a violation of the Fifth Amendment to the Constitution.