Kingtom & CBP's Investigation of Evasion of AD/CVD duties on Chinese extrusions through the Dominican Republic
CALL TO ACTION!!!
The Aluminum Extruders Council has been actively involved in combatting the evasion of the antidumping and countervailing duties on Chinese aluminum extrusions. Over the last several years there has been a notable surge of aluminum extrusion imports from the Dominican Republic. This surge coincided with the start of the Chinese owned aluminum extrusion facility in the Dominican Republic, Kingtom Aluminio S.R.L. (Kingtom).
U.S. Imports of Aluminum Extrusions from the Dominican Republic
As the chart illustrates, when the Kingtom facility came on-line beginning in 2018, imports of aluminum extrusions from the Dominican Republic surged rapidly into the United States. The facility was one of the key aspects of an investment treaty entered into between China and the Dominican government. Shortly after the treat was signed, Chinese investors supported by the Chinese Government's belt-and-road policy opened the Kingtom facility and began rapidly increasing its shipments of aluminum extrusions to the United States.
Customs examined the information provided by the AEFTC and concluded that there was reason to believe that Kingtom was exporting transshipped Chinese extrusions to the United States. Following initiation, Customs conducted an investigation of seven U.S. importers and found that the importers had evaded the Orders, based on evidence that Kingtom was exporting more aluminum extrusions than it had the capacity and capability to produce. A second office in Customs, Regulations and Rulings, reviewed TRLED's findings and also determined that the seven importers had evaded the Orders based on the evidence developed during the investigation.
History & Pressure
Earlier in 2019, one of its competitors, Ta Chen International Inc., also filed an EAPA allegation against Kingtom, alleging that three importers had imported transshipped Chinese aluminum extrusions through Kingtom. TRLED and Regulations and Rulings both made affirmative determinations of evasion in that case, as well. The Ta Chen EAPA and the seven-importer EAPA are both on appeal at the Court of International Trade.
Under pressure from these various EAPA proceedings, Kingtom switched its tactics and became the non-resident importer of record to assume the risk of duty liability and began exporting to the United States again. As a result, the AEFTC filed an EAPA allegation against Kingtom as the importer of record in October 2020 based on the same scheme of evasion, and Customs made an affirmative determination of evasion in February 2022. As part of its investigation, Customs conducted an onsite verification of Kingtom and found several labor violations, as well as a culture of intimidation by Kingtom's Chinese managers to both the local production employees and the verifying Customs officials. Regulations and Rulings is now reviewing that determination, with a result expected in early July 2022.
In the interim, it appears that the Dominican authorities were also investigating Kingtom and discovered similar labor and workers' rights abuses. The Dominican government has since forced Kingtom to cease production for the time being.
If Customs reverses its finding after having made five previous affirmative determinations, it would signal that Customs believes it must have a smoking gun of evasion before making an affirmative determination. This encourages producers like Kingtom to simply stonewall Customs and deny, deny, deny in the hopes that Customs will not discover the smoking gun. This does nothing but reward cheaters that are better at covering their tracks than others. This is inconsistent with the Congressional intent of the EAPA statute and regulations and could create a dangerous precedent for future EAPA allegations, harming the domestic industry's ability to successfully combat evasion of trade laws. It is critical that Customs uphold its two prior determinations in this case. The remand redetermination is expected by June 21, 2022.
As such, the AEC encourages its members to contact their representatives as soon as possible to describe the problem and insist that they impress upon Customs the importance of the effective enforcement of the trade laws.