CBP Announces EAPA Investigation, Interim Measures, on Xanthan Gum From China

CBP announced an Enforce and Protect Act (EAPA) investigation on whether Ebuy Enterprises and Highland USA International evaded an antidumping duty order on xanthan gum from China. The agency said it found reasonable suspicion existed that the importers had transshipped Chinese-origin xanthan gum through Malaysia, necessitating the imposition of interim measures.

The Sept. 27 announcement followed a March allegation by CP Kelco U.S., which claimed that U.S. importer Sxcus Global was evading the AD order. In April, CP Kelco amended its allegation to clarify that Ebuy was the importer and Sxcus the consignee. In May, CP Kelco filed a separate but similar allegation against U.S. importer Highland.

CP Kelco alleged Malaysian exporter Habita Food Industries exported "significant quantities" of xanthan gum to the U.S. despite Malaysia having no xanthan gum producers, and provided import data to support that claim, CBP said. CP Kelco also provided trade data that showed a single shipment of xanthan gum departing Yantian, China, and routed through Malaysia before arriving in Houston, despite being reported as Indian-origin. The alleger stated the xanthan gum couldn't have been of Indian-origin or Malaysian-origin because it is manufactured in only four countries worldwide: Austria, France, China and the U.S. CP Kelco provided International Trade Commission data to support that assertion.

In addition, CP Kelco said Sxcus and Habita don't advertise on the internet that they produce and/or sell xanthan gum, plus China is the largest supplier of xanthan gum to Malaysia, accounting for more than half of all imports. CP Kelco stated that any exports of xanthan gum from Malaysia were likely of Chinese origin.

In the Highland allegation, CP Kelco also provided a credit report and company profile for Habita that showed it was likely a grocery wholesaler instead of a xanthan gum producer. The alleger also provided import shipment data showing that Highland received shipments of merchandise described as xanthan gum, with Habita as the shipper.

CBP found that the allegation reasonably suggested evasion by both importers and initiated investigations in June and July, issuing questionnaires to both importers. CBP said the information could have enabled it to verify factory capabilities, production processes, country of origin, and confirm the identity of the manufacturers of the imported merchandise. However, neither importer responded to the issued questionnaires.

In its notice, CBP said that the information submitted by CP Kelco reasonably suggested that both companies entered merchandise covered by the AD order through evasion. The agency pointed to "a history of xanthan gum being transshipped through Malaysia," as well as trade data provided by the alleger that showed shipments from China through Malaysia to the U.S. and evidence that xanthan gum is not produced in either India or Malaysia.

Due to the similarity of the cases, CBP chose to consolidate them before imposing interim measures.

The agency said it will suspend the liquidation of each unliquidated entry that entered on or after June 22, the date of the initiation of the investigation, extend the period for liquidating each unliquidated entry of such covered merchandise that entered before that date, and may take additional measures including requiring a single transaction bond or additional security or the posting of a cash deposit with respect to such covered merchandise. CBP will require live entry and reject any entry summaries that do not comply with live entry procedure as well as evaluate Ebuy’s and Highland’s continuous bonds to determine sufficiency.