KCMA CERTIFICATIONS: 45+ YEARS OF QUALITY

KCMA OCTOBER 2020 TRADE UPDATE FROM LUKE MEISNER, SCHAGRIN ASSOCIATES

Trade Statistics. The U.S. Department of Commerce (“Commerce”) has published the most recent U.S. import statistics, which include data for October 2020.  As can be seen from the chart below, the imposition of antidumping and countervailing duties (“AD/CVD”) orders on Kitchen Cabinets, Vanities, and Components Thereof from China continues to have a huge beneficial impact for U.S. domestic cabinet producers.

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U.S. Imports of Kitchen Cabinets Under HTS 9403.40.9060

At the same time, however, there have been significant increases of U.S. imports of cabinets, vanities, and components thereof from other countries:

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Imports from the countries of Vietnam, Malaysia, and Indonesia have increased tremendously since the AD/CVD duties were imposed on imports from China. But there are also troubling increases from Mexico, Taiwan, Thailand, Cambodia, and the Philippines. Our research continues to show that these increased imports are due to a combination of transshipment of Chinese cabinets through these countries and new production facilities popping up in these countries.

E-Allegations. Since the last trade update, KCMA has filed several new E-Allegations with U.S. Customs and Border Protection (“CBP”) to alert the agency of potential evasion of the AD/CVD orders on Kitchen Cabinets, Vanities, and Components Thereof from China. Much of this evidence in these allegations has been developed from tips provided by KCMA members. We continue to see that the vast majority of evasion takes place through transshipment of Chinese merchandise through third countries – including the countries discussed above where there have been large increases in U.S. imports. We thus continue to encourage members to forward along any information regarding potential evasion to Betsy Natz.

EAPA Allegation. We have also filed a more formal allegation with CBP under the Enforce and Protect Act (“EAPA”) regarding the transshipment of Chinese cabinets through third countries. We expect CBP to publish preliminary findings in mid-December 2020.

KCMA Meetings with Customs Officials. Since Schagrin Associates has begun working on anti-evasion efforts, we have met on numerous occasions with officials from CBP to ensure strict enforcement of the antidumping and countervailing duty AD/CVD orders. CBP has informed us that they have used the information we have provided through these meetings, as well as through E-Allegations and EAPA allegations, to scrutinize imports of cabinets at the border and take action where warranted. In recent meetings, we have been coordinating with CBP officials to present the findings of an investigator that we retained to research potential transshipment of Chinese merchandise through Indonesia, Malaysia, and Vietnam.

New Shipper Review. The Chinese producer Dalian Hualing Wood Co. Ltd. (“Dalian Hualing”) has requested that the Commerce Department conduct a “new shipper review” of the company’s sales of wooden cabinets from China.  Dalian Hualing claims that it did not ship any cabinets to the United States during the period of investigation of the original antidumping investigation. Dalian Hualing claims that it only began shipping cabinets to the United States after the AD/CVD orders were issued in April 2020. Under the U.S. antidumping law, a “new shipper” can request a review under these circumstances to receive its own antidumping rate. Because Dalian Hualing was not a mandatory respondent in the original investigation, it is currently subject to the dumping rate of 262.18% and the subsidy duty rate of 20.93%. Through this new shipper review, however, Dalian Hualing is seeking to reduce its assigned dumping rate to a low or zero rate. Schagrin Associates has entered its appearance in this proceeding to fight Dalian Hualing’s attempts to get a low or zero dumping rate and begin shipping Chinese cabinets to the United States.

Vietnam Section 301 Investigations. In October 2020, the U.S. Trade Representative (“USTR”) Robert Lighthizer announced two Section 301 investigations regarding Vietnam. The first examines whether Vietnamese exports of wooden furniture and other wooden products is made with illegally harvested timber. The second examines whether Vietnam’s currency is deliberately undervalued in a manner that negatively impacts U.S. manufacturers by artificially lowering the price of Vietnamese imports into the United States. After accepting written comments in both of these investigations, USTR announced that it was holding public hearings in December 2020 and accepting rebuttal comments on these issues in January 2021. Both of these Section 301 investigations could potentially result in Section 301 duties being imposed on imports of cabinets and vanities from Vietnam. For now, however, it is unclear whether the incoming Biden administration will take action as a result of these Section 301 investigations or let them wither on the vine.