EAPA Allegation Not Sufficient to Start Investigation, Wire Hanger Importer Tells CIT

CBP unlawfully began an Enforce and Protect Act investigation into CEK Group since the allegation submitted by M&B Metal Products didn't support the start of the investigation, CEK Group argued in a Sept. 12 motion for judgment at the Court of International Trade. To start an EAPA action, there must be an allegation with specific information -- something CBP did not receive from M&B, the brief said. The plaintiff said the Royal Brush v. U.S. case at the trade court "has now constrained CBP" in EAPA cases from making decisions based on confidential information not made available to the parties via public summaries -- something CBP allegedly did in CEK Group's case (CEK Group v. U.S., CIT #22-00082).

The case concerns CBP's finding that CEK Group evaded the antidumping duty order on steel wire garment hangers from China via transshipment through Thailand. In the case's 12-count complaint, CEK Group alleged, among other things, that CBP failed to address all the arguments raised by the importer, made its decision without substantial evidence of transshipment and improperly refused to grant CEK access to business confidential information (see 2203110068).

In its motion for judgment, the plaintiff attacked M&B's allegation. CEK Group said federal regulations require an EAPA allegation must contain sufficient information to "reasonably suggest" the covered merchandise had been brought into the U.S. for consumption through evasion. The plaintiff said the first part of the allegation was mere background, alleging general trends, including high dumping rates on Chinese hangers, back a finding of transshipping.

"It is least as rational to assume that these high duties create an incentive for the creation of a new factory in another country and produce the merchandise not subject to an AD or CVD order," the brief said. "This is what [the Thai manufacturer] did when it built a production facility in Thailand and is also what alleger did, when it created a substantial operation in Mexico. That other entities in other countries may have engaged in trans-shipping also is not relevant to the operations in Thailand. Under this theory, the alleger’s theory, its own imports from Mexico would also be suspect in that they are hangers, that China is subject to high dumping rates, and trans-shipping may be occurring in other countries. This is, of course, a logical fallacy."

During the investigation, many parties including CEK Group tried to submit information showing the plaintiff imported its hangers from a Thai manufacturer, NWH, that also made the hangers in question. The brief alleged that CBP created "artificial barriers to the filing of such information, including filing limitations not contained in either the regulations or published guidance for the filing of documents." CBP also rejected high-quality video submissions from the plaintiff over file size requirements and other technical complications. Not only should CBP not have rejected the evidence submitted by CEK Group, it is now barred from using adverse inferences against the plaintiff due to spats over the quality of the evidence, the brief said.

CEK Group also pointed to the Royal Brush decision to argue against the U.S.' lack of public summaries of confidential information. As in Royal Brush "CBP unlawfully failed to provide an adequate public summary of the HSI report," the brief said. "CBP also improperly conducted a site visit before initiating that investigation. Because CBP had not yet initiated an investigation pursuant to 19 U.S.C. § 1517(b)(1), CBP lacked authority to collect information pursuant to 19 U.S.C. § 1517(c)(2)."