Cabinet Importers Contest AD/CVD Scope Rulings on Goods From Vietnam, Malaysia
A group of cabinet importers, led by ACProducts, filed a pair of complaints at the Court of International Trade on Sept. 16 contesting the Commerce Department's final scope rulings on wooden cabinets further processed in Vietnam and Malaysia. The six-count complaints contested Commerce's decision to open the inquiries and claimed that the scope rulings expanded the scope of the antidumping and countervailing duty orders on wooden cabinets from China beyond their plain-language scope to include "semi-finished components" (ACProducts v. United States, CIT #'s 24-00155, -00156).
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The American Kitchen Cabinet Alliance, a petitioner in the underlying investigation, asked for scope and country-wide scope inquiries on wooden cabinets made in China that undergo further processing in Vietnam and Malaysia. After Commerce requested clarification, the petitioner laid out four scenarios of goods it wanted the agency to consider.
The first were finished wooden doors, drawer fronts and frames made in China combined in Vietnam with cabinet and vanity boxes and drawers made in Vietnam or Malaysia.
The second scenario included semifinished wooden doors, drawer fronts and frames made in China, further processed in Vietnam or Malaysia "by, for example, trimming, cutting, notching, punching, drilling, painting, staining, or other finishing processes," and combined with Vietnam-made cabinet and vanity boxes and drawers.
The third scenario involved the same goods as scenario two, except that the third-country processing included "trimming, cutting, notching, punching, drilling, painting, staining, or other finishing processes, including the assembly of the parts to produce fully finished [wooden cabinet and vanity] doors, drawer fronts, and frames."
The fourth scenario included finished wooden toe kicks made in China combined in Vietnam or Malaysia with all other necessary components for a complete vanity or cabinet made in the third country.
In its preliminary ruling, Commerce said goods in scenario one are "Chinese in origin and, thus, covered" by the orders, though it said the record had "insufficient information" to rule on the second and third scenarios. Commerce said the goods in scenario four are third country in origin and not covered by the orders. The agency added that it wasn't "appropriate to implement a certification process," since it would look into whether a certification regime is needed in the circumvention inquiry.
After receiving more information and briefing from the parties, Commerce issued its final scope decision, finding the goods in the first three scenarios to be covered by the orders. The agency said "all seven prongs of" its "substantial transformation analysis were weighted equally" and favored its scope conclusion. The agency also said it "had the authority to implement a certification regime in a scope inquiry, established a country-wide certification regime" and "found that such a regime was reasonable."
Taking to the trade court, the importers argued that Commerce illicitly opened the scope proceedings, since the "products under consideration were not adequately defined, were hypothetical, and/or vague descriptions of product scenarios." The companies added that the rulings impermissibly expanded the scope of the orders, particularly for the goods in the second and third scenarios, since the scope of the orders "provides for the further manufacturing of 'in-scope components' in third countries that would not otherwise remove the product from the scope."
The scope rulings said the orders didn't list every individual part included under the orders but that the scope gave an "illustrative list of subject components." This analysis is at odds with the orders' plain language, since semi-finished parts "are not part of the list of components set forth in the scope language," the complaints said.
ACProducts also maligned Commerce's substantial transformation analysis. The company said the analysis behind certain prongs, "specifically intended end use, cost of production and value added, nature and sophistication of third country processing, level of investment in the third country, and the essential component or characteristics analysis, was flawed."
The complaints lastly said the (k)(1) factors cut against Commerce's findings and that Commerce's country-wide certification regime was improper "given the facts of this proceeding." The regime "created a complicated, burdensome, and unruly regime given the hypothetical production scenarios set forth in the underlying proceeding," the brief said.