WASHINGTON, D.C. — The United States Department of Commerce has launched an investigation into whether certain hardwood plywood products completed in Vietnam are using components sourced in China.
In addition, the investigation is looking into whether certain Chinese components such as assembled cores, multi-ply core panels or individual core veneers that are being combined in Vietnam with other components such as face and/or back veneers made in Vietnam or other third countries are circumventing the antidumping and countervailing duty orders on plywood from China.
Also, the agency is initiating scope inquiries to determine whether any of the products produced under any production situations alleged by the petitioner in the case are covered by the scope of the antidumping and countervailing duty orders on Chinese-made plywood.
The investigation addresses the flow of materials between China and Vietnam that are part of the global chain producing materials that are shipped to the United States to manufacture cabinetry, furniture and other wood products.
The issue stems from an initiation of scope inquiries the DOC announced in mid-January to determine whether plywood products produced by Vietnam Finewood Co. Ltd. from materials shipped from China would be considered covered merchandise subject to the duty orders.
This initiative broadened when the petitioner in late February requested that the DOC issue a scope ruling that plywood completed in Vietnam using plywood components made in China and imported to the U.S. are within the scope of the order or are circumventing the duty orders.
The petitioner said it has reason to believe that some of the Chinese producers/exporters and Vietnamese assembly operators are affiliated. It also notes that importers that previously imported Chinese plywood to the United States are now importing significant quantities of plywood from Vietnam from certain Vietnamese producers/exporters. Thus, it suggests that there may be a relationship between Chinese producers/exporters and the entities that are now importing from Vietnam.
The petitioner also noted that while Chinese plywood exports to the U.S. have fallen significantly since the order went into effect, U.S. imports of plywood from Vietnam have “skyrocketed since 2015, increasing by approximately 950%.” Meanwhile, it claims, Chinese exports of plywood to Vietnam have doubled.
Specifically, the petitioner alleged that Chinese plywood components are undergoing minor assembly in Vietnam that should not remove the merchandise from the duty orders. These materials, the petitioner argues, are entering the U.S. as Vietnamese made plywood to avoid both antidumping and countervailing duties.
The petitioner asked that the DOC determine these items constitute merchandise assembled or completed in a third country that are circumventing – and thus should be included within – the scope of the orders.
The DOC said the anti-circumvention inquiry covers plywood completed in Vietnam using plywood components (face veneer, back veneer and/or either an assembled core or individual core veneers) manufactured in China, or Chinese components (assembled cores, multi-ply core panels or individual core veneers) combined in Vietnam with other components (face and/or back veneers) manufactured in Vietnam or third countries, and subsequently exported to the United States.
As part of its investigation, the DOC will take into account five factors to determine the significance of the assembly or completion of merchandise in another country.
- The level of investment in the foreign country;
- The level of research and development in the foreign country
- The nature of the production process in the foreign country
- The extent of production facilities in the foreign country and
- Whether the value of processing performed in the foreign country represents a small portion of the value of the merchandise imported into the United States.
For a full description of the investigation and the current scope of the antidumping and countervailing duty orders, click here.