Commerce Upholds Scope Ruling on Thai Pencils Made From Chinese Inputs
Number 2 pencils, drawing pencils and colored pencils manufactured in the Philippines by School Specialty using Chinese inputs “are within the scope of the antidumping duty (AD) order on certain cased pencils from the People’s Republic of China,” the Commerce Department continued to find in its remand results filed on Feb. 6 with the Court of International Trade (School Specialty v. United States, CIT # 24-00098)
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While Commerce said “the processed downstream product constitutes a different class or kind of merchandise than the upstream Chinese-made inputs,” it said “no single factor -- including a change in the class or kind of merchandise -- is dispositive.”
The remand results were filed in response to CIT’s partial remand of Commerce’s original findings for more explanation about the scope of the substantial transformation decision (see 2508010026).
According to the final results, four other factors influenced Commerce’s determination that substantial transformation didn't occur: “physical characteristics, intended end use, nature and sophistication of processing, and where the essential characteristics of the product are imparted.”
First, regarding physical characteristics, "three of the four Chinese-origin inputs," including graphite and color cores, ferrules, and erasers, "used as components of a cased pencil are not further processed in the Philippines, and therefore, they retain their original general physical and essential characteristics when assembled into a complete cased pencil." Second, regarding intended end use, “Commerce considered that the wooden slats and graphite/color core inputs were pre-determined for a specific end use (i.e., pencil production) at the time of importation.”
Third, regarding “the nature and sophistication of processing,” “Commerce found that School Specialty’s processing steps in the Philippines are not complex and only constitute simple assembly.” Fourth, regarding "where the essential component of the product is produced or where the essential characteristics are imparted," Commerce found “the essential characteristics of the product are imparted in China before the inputs are shipped to the Philippines and assembled into a finished cased pencil.”
As a result, Commerce determined that the AD order for Chinese cased pencils applies to School Specialty’s cased pencils, confirming the agency's original findings in its May 2024 final scope ruling (see 2406030058).