China Blade Duty Evasion?

The alleged evasions of import duties are related to a 2005 case brought before U.S. authorities on customs violations by several manufacturers/exporters from China and Korea.

Daniel B. Pickard, an international-trade-practice partner for the Washington law firm of Wiley Rein LLP, alleged that some Chinese producers are misleading importers and other purchasers on duties, or attempting to convince importers to commit customs fraud to avoid payment.

“We are aware that certain producers in China are attempting to illegally circumvent the antidumping duty order,” Pickard said. “The U.S. industry is committed to ensuring that circumvention is prevented, and that fraudulent importations are prosecuted to the fullest extent of the law. Importers should be aware that some exporters are misrepresenting the applicable duty rates, or even encouraging importers to defraud the government.”

Wiley Rein presented information to the U.S. Bureau of Customs and Border Protection that “strongly indicates” the actions.

The law firm’s actions are related to a May 2005 petition filed with the U.S. International Trade Commission (USITC) by the Diamond Sawblade Manufacturers’ Coalition concerning alleged import violations by some Chinese and Korean exporters of diamond blades and related parts. The USITC originally ruled in July 2006 that the domestic industry wasn’t harmed by import of the goods, only to have the case returned to it in February 2008 after the U.S. group appealed to the Court of International Trade.

The court’s ruling instructed the USITC to give more explanation of its finding that there was limited competition between the imports from China and Korea and the similar domestic product during the period of investigation, and detail its findings on volume, price, impact, and competition threat.

The court also required further explanation of certain aspects from the USITC on its finding that there wasn’t a correlation between domestic producers’ price movements and prices for the subject imports.

Members of the U.S. manufacturers group bringing the initial action included Blackhawk
Diamond Inc. of Fullerton, Calif.; Diamond B Inc. of Santa Fe Springs, Calif.; Diamond Products of Elyria, Ohio; Dixie Diamond of Lilburn, Ga.; Hoffman Diamond of Punxsutawney, Pa.; Hyde Manufacturing of Southbridge, Mass.; Sanders Saws of Honey Brook, Pa.; Terra Diamond of Salt Lake City; and Western Saw Inc. of Oxnard, Calif..

A statement from Wiley Rein charged that one prevalent scheme includes misinforming potential importers that the antidumping duty rate is far lower than its actual total, potentially subjecting the importer to large and unforeseen duty liabilities.

It also alleged that Chinese producers and exporters encourage importers to commit both classification and valuation fraud by importing the merchandise under inappropriate tariff provisions, or altering invoices and Customs documentation to reflect a price lower than the actual sales price.

Diamond saw blades, diamond segments, and diamond saw-blade cores from China are currently subject to antidumping duties of up to 164 percent, according to the Wiley Rein statement. Korean saw blades, cores and segments are also subject to duties of up to 26 percent.

“We urge purchasers dealing with producers in China and Korea to be aware of these schemes, and not to simply take a supplier’s word that duties don’t apply or can easily be avoided,” Pickard added. “Circumvention is illegal and can expose purchasers to significant civil and criminal penalties.

“The U.S. government has determined that Chinese and Korean diamond saw blades are being sold at dumped prices and threaten material injury to the U.S. producers. We are going to take all appropriate steps to make sure that the antidumping orders are fully enforced.”