Am. Pac. Plywood, Inc. v. United States
| Docket Number | 20-03914,Slip Op. 23-93 |
| Decision Date | 22 June 2023 |
| Parties | AMERICAN PACIFIC PLYWOOD, INC., INTERGLOBAL FOREST LLC, and U.S. GLOBAL FOREST, INC., Plaintiffs, v. UNITED STATES, Defendant, and LB WOOD CAMBODIA CO., LTD., and CAMBODIAN HAPPY HOME WOOD PRODUCTS CO, LTD., Plaintiff-Intervenors, and COALITION FOR FAIR TRADE IN HARDWOOD PLYWOOD, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
[The court sustains Customs's finding of evasion and enters judgment for Defendant and Defendant-Intervenor.]
Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, DC, argued for Plaintiffs American Pacific and U.S. Global and for Plaintiff-Intervenors. With him on the briefs, except for Plaintiff InterGlobal Forest's reply brief, were J. Kevin Horgan and Alexandra H. Salzman. Vivien J. Wang, deKieffer & Horgan, PLLC, of Washington, DC presented rebuttal argument for Plaintiffs American Pacific and U.S. Global and for Plaintiff-Intervenors.
Ignacio J. Lazo, Cadden & Fuller LLP of Irvine, CA argued for Plaintiff InterGlobal Forest, LLC. On the reply brief was Thomas H. Cadden.
Hardeep K. Josan, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of New York, NY, argued for Defendant. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General; Patricia M. McCarthy, Director; Justin R. Miller, Attorney-in-Charge International Trade Field Office; and Claudia Burke, Assistant Director. Of counsel on the brief was Jennifer Petelle, Attorney, Office of the Chief Counsel, U.S. Customs and Border Protection.
Maureen E. Thorson, Wiley Rein LLP of Washington, DC, argued for Defendant-Intervenor. With her on the brief were Timothy C. Brightbill and Stephanie M. Bell.
Before: M. Miller Baker, Judge
This sprawling matter involves consolidated cases brought by three U.S. importers, supported by two plaintiff-intervenor Cambodian producers, challenging U.S. Customs and Border Protection's determination that Plaintiffs evaded antidumping and countervailing duties on hardwood plywood from China by misrepresenting it as a product of Cambodia. For the reasons explained below, the court sustains the agency's decision.
The Enforce and Protect Act (EAPA) amended the Tariff Act of 1930 by inserting a new section, "Procedures for Investigating Claims of Evasion of Antidumping and Countervailing Duty Orders." See Pub. L. No. 114-125, § 421, 130 Stat. 122, 161 (2016), codified at 19 U.S.C. § 1517.
EAPA directs Customs to initiate an investigation within 15 days after receiving an allegation that "reasonably suggests" that covered merchandise subject to an antidumping or countervailing duty order has been imported into this country through "evasion." See 19 U.S.C. § 1517(a)(3), (b)(1). The statute defines "evasion" as the entry of goods through any false statement or omission that results in the reduction or nonpayment of antidumping or countervailing duties. See id. § 1517(a)(5)(A).
After starting an investigation, Customs has 90 days to decide "if there is a reasonable suspicion" that the goods were imported through evasion. Id. § 1517(e). If the agency so finds, it must impose "interim measures," which the statute defines as suspending the liquidation of unliquidated entries that were imported on or after the date the agency started the investigation, extending the period for liquidation as necessary, and taking "such additional measures" as necessary to protect the government's revenue interests, including requiring the posting of additional security. See id. § 1517(e)(1)-(3).[1]
"Reasonable suspicion" applies only to the imposition of "interim measures." Customs must then make a final "determination of evasion" within 300 calendar days from the investigation's start and decide, "based on substantial evidence," whether the entries in question were made through evasion. 19 U.S.C. § 1517(c)(1)(A). If the agency finds evasion, it must (1) suspend liquidation of relevant entries made between the investigation's start and the final determination, id. § 1517(d)(1)(A)(i); (2) extend the liquidation period for entries made before the investigation started, id. § 1517(d)(1)(B)(i); (3) notify the Department of Commerce of the determination and ask it to identify either the applicable antidumping/countervailing duty rates or cash deposit rates for the relevant entries, id. § 1517(d)(1)(C)(i)-(ii); and (4) require the posting of cash deposits and assess duties on the relevant entries per Commerce's direction, id. § 1517(d)(1)(D).[2]
After the final determination, the statute authorizes an administrative appeal in which the Customs Commissioner conducts a de novo review. The appellant may be either "a person determined to have entered such covered merchandise through evasion" or "an interested party that filed an allegation" that sparked the investigation. Id. § 1517(f)(1). Those same parties may then "seek judicial review of the determination under subsection (c) [] and the review under subsection (f) [] in" this court. Id. § 1517(g)(1).
In 2018, Commerce imposed antidumping and countervailing duties on U.S. imports of certain hardwood plywood products from China. Certain Hardwood Plywood Products from the People's Republic of China: Amended Final Determination of Sales at Less Than Fair Value, and Antidumping Duty Order, 83 Fed.Reg. 504, 504-13 (Dep't Commerce Jan 4, 2018); Certain Hardwood Plywood Products from the People's Republic of China: Countervailing Duty Order, 83 Fed.Reg. 513, 513-16 (Dep't Commerce Jan. 4, 2018).
The three plaintiffs here-American Pacific Plywood, Inc.; U.S. Global Forest, Inc.; and InterGlobal Forest, LLC, all U.S. importers of hardwood plywood- assert that Chinese plywood manufacturers anticipated the duties and "responded by moving plywood production to Cambodia, beyond the geographic scope of the Orders." ECF 49, at 1-2. For example, they state that in 2017 the company that originally "sold finished plywood products directly to [InterGlobal Forest] and shipped them from China . . . formed and funded a Cambodian company, LB Wood Cambodia Co., Ltd." Id. at 2.
LB Wood is a plaintiff-intervenor and is based in the Sihanoukville Special Economic Zone, an area near Cambodia's only deep-water port that was established as an "economic and trade cooperation zone constructed by Chinese and Cambodian enterprises." Appx1022. The other plaintiff-intervenor, Cambodian Happy Home Wood Products Co., Ltd., operates in the same zone. Appx1024.
It appears to be undisputed that after Commerce implemented the antidumping and countervailing duty orders, Plaintiffs-and other U.S. hardwood plywood importers-quickly shifted their purchases from Chinese producers to LB Wood and Happy Home. In response, during 2019 the Coalition for Fair Trade in Hardwood Plywood filed an allegation with Customs that Plaintiffs were selling Chinese hardwood plywood that was transshipped through, and mislabeled as originating from, Cambodia.
Customs then investigated, Appx1021, found a reasonable suspicion of evasion, and imposed interim measures under 19 U.S.C. § 1517(e). Appx1028. The measures included suspending liquidation of Plaintiffs' entries of hardwood plywood from Cambodia; adjusting the duty rates so the entries would be subject to the antidumping and countervailing duty orders; requiring cash deposits of 194.53 percent ad valorem for all entries unliquidated as of June 5, 2018; and extending suspension for all unliquidated entries. Appx1021, Appx1026-28.
Customs notified Plaintiffs of the investigation and of the interim measures on October 1, 2019, Appx1020 et seq., and provided them with public versions of the Coalition's allegation letters and the agency's initiation memoranda. Plaintiffs and Plaintiff-Intervenors submitted written arguments and the Coalition responded.
Customs reached a final decision in June 2020. Appx1034. The agency determined that substantial evidence in the administrative record showed that Plaintiffs' imports were entered through evasion, resulting in the avoidance of applicable antidumping or countervailing duty deposits or other security. Appx1038. Along with producer-specific facts, Customs relied on an agency employee's visit to Plaintiff-Intervenors' Cambodian factories before the investigation. The employee noted, among other things, that the types of plywood at the factories are "temperate woods that do not grow well in Cambodia's tropical climate." Appx1039; Appx1044.[3]
Customs found that LB Wood's parent company is [[ ]]. Appx1035, Appx1038. The agency emphasized that LB Wood registered as a business in Cambodia only after Commerce's preliminary determination in its antidumping duty investigation.[4] The company sourced "most of its raw materials, [[ ]] percent by value, from [[ ]]," and "also sourced some of its raw materials from [[ ]]," such that "LB Wood sourced raw materials almost exclusively from [[ ]] . . . ." Appx1039.
The agency concluded that "record evidence shows that not only was LB Wood likely established with a goal to avoid paying AD/CVD duties on Chinese plywood, its location [in the Sihanoukville special zone] helped facilitate such evasion." Appx1038. Sales data also showed that "LB Wood's relationship with American Pacific and InterGlobal began only [[ ]] the January 2018 imposition of the AD/CVD orders on Chinese plywood." Appx1039.
Customs found that Happy Home sourced [[ ]] percent of its raw materials by value from [[ ]] and that [[ ]] percent by value came from [[ ]]. Appx1044. "Thus, Happy Home sourced [[ ]] of its raw materials from [[ ]] . . . ." Id. Happy Home's [[ ]] admitted the company ...
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