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Chinese Diamond Sawblades Manufacturers Caught in Evasion of U.S. Trade Order through Transshipment Scheme Involving Thailand

October 31, 2018

Washington, DC — Yesterday, U.S. Customs and Border Protection (CBP) announced that it has “reasonable suspicion” that a Chinese manufacturer of diamond sawblades, Lyke Industrial Tool, LLC, has entered goods into the United States through an evasion of the antidumping duty (AD) order on diamond sawblades from China.

This decision followed an allegation by the Diamond Sawblades Manufacturers’ Coalition (DSMC), an ad hoc coalition of U.S. manufacturers, and further examination by CBP, under the Enforce and Protect Act of 2015 (EAPA). As alleged by DSMC, CBP has determined that there is evidence to support a reasonable suspicion that Lyke has entered merchandise into the United States through evasion by means of transshipment from China through Thailand. And as a result of this finding, CBP has initiated an investigation under the EAPA, and adopted interim measures against Lyke.

“This is the fourth time we’ve successfully used the EAPA law to provide significant relief to the domestic industry from injurious imports,” said Daniel B. Pickard, a partner in Wiley Rein LLP’s International Trade Practice and counsel to DSMC. “We are pleased by CBP’s latest decision and thankful for the agency’s continued commitment to the vigorous enforcement of AD/CVD laws,” Mr. Pickard added.

This is the latest in a number of investigations that CBP has initiated under the EAPA, an act passed in 2015 that established a formal process for the investigation of companies that are believed to be evading U.S. antidumping and countervailing duty orders. In July of this year, DSMC presented its allegation to CBP, noting among other things new patterns in trade data relating to shipments of diamond sawblades. CBP then undertook an examination of entries from Thailand and, in particular, found a pallet of cartons that had intact or partially torn-off “Made in China” markings hidden under “Made in Thailand” labels.

The agency also conducted a foreign site visit to the Thai company alleged to be part of Lyke’s evasion scheme and made observations on numerous discrepancies. Notably, CBP observed discrepancies in onsite production records, was precluded from reviewing invoices for raw materials, shipping records, and other accounting documents, and came across packages of unmarked diamond sawblades that supposedly belonged to another, unnamed company.

In light of evidence presented in DSMC’s allegation, as well as additional evidence gathered by CBP, the agency found reasonable suspicion of an evasion of the AD order by transshipment through Thailand and imposed interim measures against Lyke. These measures include a rate-adjustment to merchandise from Thailand that is entered as not subject to the AD order, and a requirement that all entry documents and duties be presented before the merchandise is released into commerce.