China Zhongwang Disputes “Groundless” Claims of its U.S. Activity

Chinese aluminum company China Zhongwang is pushing back against what it says are “misrepresentations” of its U.S. market participation and “groundless” accusations of evading duties.

“We would like to reaffirm strongly that China Zhongwang is an independent, non-state owned and market-driven company, and we support fair business competition,” Lu Changqing, president of the company, said in a statement. “We always strive for compliance with applicable trade regulations in markets where we operate.”

The company has been at the center of a trade dispute with members of the American aluminum extruders industry, led by the Aluminum Extruders Council (AEC). Last year, the AEC petitioned the U.S. Department of Commerce (DOC) to investigate China Zhongwang after a detailed report was published by short seller Dupre Analytics, laying out alleged duty circumvention and other illegitimate practices.

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The DOC has since been investigating the company concerning its 5050 alloy extrusions. Wednesday, Zhongwang asserted that it ceased production of 5050 alloy in early 2015, approximately eight months prior to the initiation of the investigation. It also claims it exported “a very small amount of that product between 2013 and 2015, consisting of approximately 1500 tons.” The company says the volume of exports of that product “were insignificant, constituting less than 1 percent of the company’s total sales over that period,” adding that it has no plans to sell the product in the future.

Zhongwang has been accused of re-melting aluminum pallets into raw material in order to evade duties, which it denies.

“Pallets are a wholly different product in finished form sold to a wholly different customer and for different use than extruded products,” the company claims. “Pallets of this type are made-to-order and sold at relatively higher prices, and it would make no commercial sense to re-melt them as some third parties have alleged. The company is also not aware of these pallets being used by others for such purpose.”

Various media reports have detailed alleged stockpiling operations outside of China by Zhongwang, something it also contests. “Pursuant to relevant trade regulations, Chinese companies will not be able to evade duties by exporting products to the U.S. via Mexico, as related anti-dumping and countervailing duties will still be levied according to their country of origin,” it says.

The company cites data from China Customs and the United States International Trade Commission in noting that “total export of aluminum rods and extruded products from China to Mexico during 2001-2015 totaled approximately 800,000 tons. It is impossible for Zhongwang to have exported an amount that exceeds the 15-year total of all Chinese exports to Mexico.”

The company says that during that fifteen year period between 2001 and 2015, “total export of aluminum products from Mexico to the U.S. amounted to 291,000 tons, accounting for only 1.57 percent of total U.S. imports. … The allegations against Zhongwang transshipping products to Mexico or the implied exaggerated impact of the small volume of exports from Mexico to the U.S. are groundless.”

Zhongwang has retained Steptoe & Johnson LLP as trade counsel to represent it in the U.S.

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