C-AIR TIMES ISSUE #661 - Friday, December 18, 2020 09:01

Amended Regulations Covering Section 232 Exclusions on Steel and Aluminum Products to be Published - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

In a notice to be published in the Federal Register on December 14, 2020, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce (DOC) announced a new interim final rule amending the exclusion process with respect to steel and aluminum mill products covered by additional duties under Section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”). Unless excluded, steel and aluminum products covered by this action are, respectively, subject to an additional tariff of 25% and 10% ad valorem.

The action reflects an acknowledgment of existing inefficiencies in the current exclusion process and makes three notable changes.

First, the new rule addresses the need to create a more efficient method for approving exclusions where objections have not been received in the past for certain steel or aluminum articles. Specifically, the new rule establishes General Approved Exclusions (GAEs) that may be used by any importing entity (and which do not include quantity limits but are not retroactive in effect). These determinations are made by DOC (in consultation with other agencies) based on its review of the universe of exclusion requests that are filed. There is no regulatory mechanism for public requests for GAEs. The new rule establishes an initial 108 GAEs for steel articles under and 15 GAEs for aluminum articles (all of which can be accessed at: https://public-inspection.federalregister.gov/2020-27110.pdf?utm_campaign=pi%20subscription%20mailing%20list&utm_source=federalregister.gov&utm_medium=email). New GAEs may be established in the future.

Second, the new rule addresses a trend whereby exclusion requesters may have requested more volume than they have needed for their own business purposes compared to past usage. This issue is addressed by adding a new certification requirement along with a reminder of the consequences that may result from such false statements.

Third, the term “immediately” in the context of an objector’s ability to supply is being harmonized for U.S. objectors and foreign suppliers. Specifically, immediate delivery is redefined from a flat eight weeks to either within eight weeks, or if after eight weeks, produced and delivered within a time frame that is equal to or earlier than that needed by the requester as demonstrated by the time required to obtain the product from the requester’s foreign supplier.

Other notable areas touched on in the new rulemaking include:

A list of common reasons for rejection of exclusion requests.
Enhancements in the area of submitting Confidential Business Information.
Clarification of what constitutes a single product.
Modification of certain technical aspects associated with submitting exclusion requests.

Other areas for potential changes in the Section 232 exclusion process are still under consideration by BIS and will be announced in one or more future rulemaking notices.

Should you have any questions or if we can be of assistance in helping your company prepare and file Section 232 exclusion requests for covered products, please do not hesitate to contact us.

Federal Register Notices:

The United States International Trade Commission (USITC) today determined that there is a reasonable indication that a U.S. industry is materially injured by reason of imports of polyester textured yarn from Indonesia, Malaysia, Thailand, and Vietnam that are allegedly sold in the United States at less than fair value.

Chair Jason E. Kearns, Vice Chair Randolph J. Stayin, and Commissioners David S. Johanson, Rhonda K. Schmidtlein, and Amy A. Karpel voted in the affirmative.

As a result of the Commission’s affirmative determinations, the U.S. Department of Commerce will continue its investigations of imports of polyester textured yarn from Indonesia, Malaysia, Thailand, and Vietnam, with its preliminary antidumping duty determinations due on or about April 6, 2021.

The Commission’s public report Polyester Textured Yarn from Indonesia, Malaysia, Thailand, and Vietnam (Inv. Nos. 731-TA-1550-1553 (Preliminary), USITC Publication 5148, December 2020) will contain the views of the Commission and information developed during the investigations.

The report will be available after January 11, 2021; when available, it may be accessed on the USITC website at: https://www.usitc.gov/commission_publications_library.

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UNITED STATES INTERNATIONAL TRADE COMMISSION
Washington, DC 20436

FACTUAL HIGHLIGHTS

Polyester Textured Yarn from Indonesia, Malaysia, Thailand, and Vietnam
Investigation Nos. 731-TA-1550-1553 (Preliminary)

Product Description: Polyester textured yarn is synthetic multifilament yarn that is manufactured from polyester (polyethylene terephthalate) and produced through a texturing process, which imparts special properties to the filaments of the yarn, including stretch, bulk, strength, moisture absorption, insulation, and the appearance of a natural fiber.

Status of Proceedings:

1. Type of investigation: Preliminary phase antidumping duty investigations.
2. Petitioners: Nan Ya Plastics Corp. America, Lake City, SC; and Unifi Manufacturing, Inc., Greensboro,
NC.
3. USITC Institution Date: Wednesday, October 28, 2020.
4. USITC Conference Date: Wednesday, November 18, 2020.
5. USITC Vote Date: Friday, December 11, 2020.
6. USITC Notification to Commerce Date: Monday, December 14, 2020.

U.S. Industry in 2019:

1. Number of U.S. producers: 5.
2. Location of producers’ plants: North Carolina and South Carolina.
3. Production and related workers: [1]
4. U.S. producers’ U.S. shipments: 1
5. Apparent U.S. consumption: 1
6. Ratio of subject imports to apparent U.S. consumption: 1

U.S. Imports in 2019:

1. Subject imports: $38 million.
2. Non-subject imports: $103 million.
3. Leading import sources: Mexico, India, Indonesia, and Malaysia.

____________________________

[1] Withheld to avoid disclosure of business proprietary information.

CBP Modifies Withhold Release Order on Imports of Bone Black from Bonechar Carvão Ativado do Brasil Ltd - U.S. Customs & Border Protection

WASHINGTON — U.S. Customs and Border Protection announced today that it modified a Withhold Release Order (WRO) such that bone black produced by Bonechar Carvão Ativado do Brasil Ltda (Bonechar) is admissible at all U.S. ports of entry effective December 4, 2020.

CBP previously prevented these bone black imports from entering the United States based on reasonable suspicion that they were produced using forced labor. Imports of bone black produced by Bonechar prior to the effective date of the WRO modification remain inadmissible.

CBP modified the WRO after receiving detailed information about the labor conditions under which Bonechar produces bone black, a form of charcoal made by heating bone that is used to filter substances like water and sugar. The company addressed each of the five indicators of forced labor identified by CBP in a submission which incorporated data from worker interviews, a site visit, and document reviews. Employees are free to leave the premises if they wish and are not subjected to any form of punishment. The evidence provided sufficiently supports Bonechar and an affiliated importer’s claim that the bone black from the company has not been produced using forced labor since at least August 2020.

“The modification of this WRO demonstrates that companies are taking the consequences of CBP’s forced labor enforcement seriously,” said Brenda Smith, Executive Assistant Commissioner of CBP’s Office of Trade. “CBP recognizes the impact that WROs have on importers and exporters and thoroughly reviews petitions and admissibility requests. If companies demonstrate that there is no forced labor in their supply chains, CBP will modify the WRO to exclude them.”

Federal statute 19 U.S.C. 1307 prohibits the importation of merchandise mined, manufactured or produced, wholly or in part, by forced labor, including convict labor, forced child labor, and indentured labor.

CBP is committed to identifying and preventing products made by forced labor from entering the United States to support ethical and humane trade while leveling the playing field for U.S. companies that respect fair labor standards. The agency receives allegations of forced labor from a variety of sources, including the public. Any person or organization that has reason to believe merchandise produced with the use of forced labor is being, or likely to be, imported into the United States can report detailed allegations by contacting CBP through the e-Allegations Online Trade Violation Reporting System or by calling 1-800-BE-ALERT.

15 Named In $26 Million International Trade Fraud Scheme - Department of Justice

A federal grand jury in Houston, Texas, has returned a criminal indictment against eight individuals, while a related civil complaint has charged 14 individuals and one company relating to international trade fraud violations stemming from a decade-long scheme involving tires from China.

Law enforcement arrested Zheng “Miranda” Zhou, 53, of Missouri City, and Kun “Bruce” Liu, 40, of Sugar Land, yesterday. They made their initial appearances in Houston federal court today, at which time the criminal indictment was unsealed.

Also charged in the indictment are Qinghua “Shirley” Song, 44, of Jurupa Valley, California; and Chinese residents Yue “Joanna” Peng, 42, Li “Cathy” Chen, 38, Xin “Devin” Zhang, age unknown, Shaohui “Jasper” Jia, 40, and Deng “David” Yongqiang, 36. They are all considered fugitives and warrants remain outstanding for their arrests.

The Department of Justice’s Civil Division also filed a civil complaint Dec. 11 alleging trade fraud in the U.S. Court of International Trade. The complaint names the eight criminal defendants and six other individuals - Xiaozhen “Jenny” Zhang, 34, Di “Terry” Wang, 34, Liang “Leon” Yu, 49, Lin “Leo” Zhang, 37, Jinbing “David” Wang, 36, and Minglian “Bill” Li, 28, as well as Houston area company Winland International Inc., dba Super Tire Inc. David Wang is a resident of New Jersey, while the remaining civil defendants reside in China.

“The Civil Division, through the Department of Justice’s Trade Fraud Task Force (TFTF), will continue to partner with U.S. law enforcement agencies and U.S. Attorneys’ Offices to aggressively investigate and pursue individuals and companies who attempt to evade U.S. customs laws and target the U.S. manufacturing base with unfair trade practices,” said Acting Assistant Attorney General Jeffery Bossert Clark. “We recognize the importance of ensuring that U.S. manufacturers are competing on a level playing field.”

“China and its industries want to rob, replicate and replace American made good and technology,” said U.S. Attorney Ryan K. Patrick for the Southern District of Texas. “Illegally importing and dumping these goods is one way to systemically weaken American competitors. Whether direct espionage by the Chinese government or trade fraud like in this case, we will continue to investigate and prosecute every case we can.”

The indictment and complaint allege the defendants conspired to avoid anti-dumping duties associated with off-the-road (OTR) and light vehicle and truck (LVT) tires from China. Working through and with Winland, individuals allegedly imported OTR and LVT tires from companies that were subject to anti-dumping duties associated with Chinese tire manufacturers who had engaged in unfair trade practices in the United States.

The complaint further alleges U.S.-based defendants conspired with defendants in China to obtain falsified invoices and entry records of Chinese tire companies that were subject to a lower duty rate than the actual manufacturers of these tires. Defendants submitted these falsified records to U.S. Customs officials when importing tires into the United States, so that Winland could avoid paying the higher duty rates, according to the allegations. The indictment and complaint also allege they used these falsified records to understate the value of these tires, further lowering the amount Winland owed in duties.

The value of these tires allegedly exceeded $20.9 million and resulted in the deprivation to the United States of more than $6.5 million in import duties.

“For more than a decade, Zhou and her co-conspirators are alleged to have sought to gain an unfair competitive advantage at the expense of U.S. companies and consumers through a series of schemes in violation of fair trade practices and U.S. import regulations,” said Special Agent in Charge Mark B. Dawson of Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) - Houston. “Working closely with our U.S. and foreign law enforcement partners, and in coordination with the National Intellectual Property Rights Coordination Center, we were able to uncover these alleged deceptive practices leading to the criminal indictment and imposition of almost $21 million in civil penalties.”

“Customs and Border Protection (CBP) takes its trade mission of protecting the U.S. economy very seriously as we strive to maintain fair trade and preserve American jobs from predatory practices,” said CBP’s Director of Detroit Field Operations Christopher Perry. “These civil penalties and criminal indictments should serve as a warning to those who attempt to defraud our government and do harm to our economy and American businesses.”

The Houston Trade/Revenue Interdiction and Enforcement Team conducted the collaborative investigation along with CBP’s Automotive and Aerospace Center of Excellence and Expertise with the assistance of U.S. Citizenship and Immigration Services.

William Kanellis of TFTF is handling the civil matter. TFTF is an inter-agency law enforcement task force with the primary mission of identifying, interdicting and prosecuting international trade fraud. Assistant U.S. Attorneys Suzanne Emilady and Craig Feazel of the Southern District of Texas are prosecuting the criminal case.

An indictment or complaint is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

Two Shipments, $9.6 Million Worth of Fake Jewelry, Watches Seized in Cincinnati - U.S. Customs & Border Protection

CINCINNATI–-Last Thursday, U.S. Customs and Border Protection (CBP) officers in Cincinnati seized two shipments of jewelry and watches deemed to be counterfeit by CBP’s Centers of Excellence and Expertise.

The first shipment originated from Shenzen, China, and was destined to a private residence in Norcross Georgia. Although it had a declared value of $315, the package held 171 items of jewelry or watches labeled as Versace, Michael Kors, Cartier, Salvatore Ferragamo, Dior, Tiffany, Bulgari, Armani, Hugo Boss, Burberry, Hublot, Patek Phillippe, Audemars Piguet, Louis Vuitton, Fossil, Omega, or Rolex. Had the 171 items been genuine, the cumulative Manufacturer’s Suggested Retail Price (MSRP) would have been $8,419,017.

The second shipment came through a freight forwarder in Hong Kong and was destined to an individual in West Palm Beach, Florida. This shipment contained 113 counterfeit Cartier bracelets with a total MSRP $1,170,000, had they been real.

“These large seizures illustrate the work our officers do every day to protect our country, its citizens, and the economy,” said Cincinnati Port Director Richard Gillespie. “Our officers are dedicated to preventing counterfeiters from defrauding consumers and legitimate businesses."

Intellectual property rights (IPR) violations are associated with smuggling and other criminal activities, and often funds criminal enterprises. CBP Trade protects the intellectual property rights of American businesses, safeguarding them from unfair competition and use for malicious intent while upholding American innovation and ingenuity. Suspected violations can be reported to CBP here.