Commerce Did Not Err in Finding Imported Plywood Within Scope of AD/CVD Orders, DOJ Tells CIT

The Commerce Department did not err in its scope ruling that found that two-ply hardwood plywood fell under the antidumping and countervailing duty orders on hardwood plywood from China, the government said in a Nov. 18 reply brief at the Court of International Trade. The brief asked the court to sustain the underlying scope ruling (Vietnam Finewood Company Ltd. v. U.S., CIT # 22-00049).

Vietnam Finewood brought the case. Commerce originally imposed the AD/CVD orders in January 2018. Later that year, CBP initiated an Enforce and Protect Act investigation on Finewood and its U.S. customers. CBP then made a scope referral to Commerce to determine whether the two-ply cores further processed in Vietnam were within the scope of the orders. In January 2022, Commerce issued its final determination, which found that Finewood’s two-ply panels were within the scope based on the ambiguous scope language and that the two-ply panels were not substantially transformed in Vietnam.

Finewood said in a complaint filed at CIT in February that "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" (see 2202220052). In an August motion, Finewood argued that its two-ply panels are intermediate raw material products and are completely different from finished plywood and that Finewood never sold any two-ply panels to the U.S., only sold finished hardwood plywood consisting of at least three plies.

The two-ply panels that Finewood purchased have "none of the essential characteristics of finished hardwood plywood and can only reasonably be characterized as semi-finished raw materials," the company said. Intervenor InterGlobal, a U.S. plywood importer, said that Commerce abused its discretion by finding ambiguity in the scope language where there was none, and that CBP and Commerce engaged in a "transparent ruse" designed to allow CBP to claim that the specific two-ply panels used by Finewood constituted “covered merchandise" (see 2208170038).

In its reply brief, DOJ argued that the orders apply to plywood that meets the physical description of the scope even if it is exported to a third country for additional processing, "so long as [it] continues to meet the physical description." Commerce found that the plywood was not substantially transformed by the processing in Vietnam, and thus subject to the orders.

Commerce determined that Finewood’s two-ply panels, which it imported from China, were subject to the scope as a veneered panel, defined as a veneer of hardwood affixed to a base, usually of inferior wood, by gluing under pressure. Commerce did not expand the scope of the orders, DOJ argued. Instead, the agency merely "filled a statutory gap by applying its substantial transformation analysis to determine whether the finished hardwood plywood remained subject to the Orders." Finally, DOJ argued that "enforcing its regulatory deadlines" was not an "abuse of discretion" as alleged by InterGlobal.