Commerce: Chinese Aluminum Exports in Question Fall Under Orders

The Department of Commerce (DOC) says Chinese aluminum giant China Zhongwang intentionally skirted U.S. trade duties in recent years, according to a preliminary determination issued last week.

Commerce determined Zhongwang, which is at the center of an investigation regarding tariff circumvention, used heat-treated 5050 alloy aluminum extrusions to avoid duties put in place in 2010. The type of aluminum in question didn’t fall under the original scope ruling but was similar enough to be used in the same manner, and the DOC concluded it should be subject to the tariffs.

According to a memorandum from the DOC, Commerce said Zhongwang and other Chinese producers employed new methods of selling the aluminum after the tariffs were put in place with the intention of evading duties, the Wall Street Journal reported.

Zhongwang didn’t respond to questions from U.S. government officials earlier this year, and Commerce determined the company impeded proceedings by withholding information.

The investigation stemmed from a petition filed by the Aluminum Extruders Council (AEC) and other members of the U.S. aluminum industry, which allege the Chinese importers’ tactics are significantly affecting and undermining the domestic industry.

“Zhongwang has no interest in participating at Commerce and has instead looked for ways to exploit the system from the beginning,” says Alan H. Price, counsel to the petitioners and chair of Wiley Rein’s International Trade Practice. “The Department’s determination is a step in the right direction to correct Zhongwang’s blatant attempts to cheat and evade the orders.”

Zhongwang president Lu Changqing issued a statement in response to the DOC’s announcement, noting that the company respects the determination that the import of 5050 alloy extrusions from China is considered circumvention “and take[s] seriously compliance with U.S. trade laws.”

Lu defended the company’s lack of participation in the DOC’s inquiry, pointing out that it was voluntary.

“[A]mong the reasons we chose not to participate include that China Zhongwang ceased production of those products close to two years ago, in early 2015, and we have no plans to produce or sell such products in the future,” he said. “We exported an insignificant amount of 5050 extrusions in response to customer requests between 2013 and early 2015, constituting less than 0.1 percent of our total sales over that period. The determination therefore has no impact on our sales and operations.”

Lu added that media reports have “inaccurately described China Zhongwang’s corporate nature as well as the background of Mr. Liu Zhongtian, its founder and majority owner, Mr. Liu is not a member of any political organization, and China Zhongwang is an independent, non-state owned and market-driven company. We always strive for compliance with relevant trade regulations in markets we operate, and support fair business competition.”

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

The DOC has applied its ruling to cover all Chinese producers and exporters. According to the AEC, its preliminary determination indicates Customs and Border Protection will suspend liquidation and collect cash deposits on 5050 aluminum alloy extrusions that entered the U.S. on or after March 21, 2016.

Jeff Henderson, president of the AEC, says the council is pleased with the DOC’s decision. “We know Commerce has worked hard on this case, and we thank them for that,” he says.

Commerce plans to issue its final circumvention determination by January 9, 2017.