China has stepped up its attempts to duck the U.S.-imposed tariffs on plywood, according to a report from the Wall Street Journal.
These new evasion attempts involve the identification codes placed on every product imported to the U.S. The 10-digit codes, of which there are around 19,000, identify products and provide a common language to bridge different markets.
Although data is scarce, some Chinese wood exporters are reportedly altering these codes to avoid tariffs, says the WSJ.
WSJ spoke with an Oregon wood importer who says he was called by a Chinese supplier asking if he would like to get some Chinese plywood free of tariffs. The importer questioned the caller of how that would work, and the caller replied that the plywood would be stripped of its Chinese markings and that it would be shipped "under some other code."
Chinese exporters reportedly exchange information regarding tariff codes on websites like Yishanghuiyou (Friends Through Commerce). Forum posters directly ask each other for plywood codes that can dodge inspections and avoid higher tariffs.
One indication this practice is on the rise is a surging number of U.S. Customs rulings on questionable export Chinese export classifications. There were nearly 150 rulings in July - up nearly triple from six months ago.
It's estimated that the U.S. loses around $550 million in customs revenue each year because of tariff evasion. Less than 5 percent of U.S. imports are physically opened.
The Decorative Hardwoods Association and the Coalition for Fair Trade of Hardwood Plywood both voiced evasion and antidumping concerns to the U.S. Department of Commerce earlier this year.
“Before the orders were issued, Chinese producers began to preemptively circumvent the anticipated orders by taking merchandise fully covered by the scope and making minor alterations in an attempt to remove products from the coverage of the scope to avoid duties," said Tim Brightbill of Wiley Rein, the law firm representing the Coalition. "Such blatant attempts to evade the orders are depriving the domestic industry of the full extent of the trade relief it deserves.
After investigating, Commerce declared certain types of hardwood plywood from China - those that are packaged as kitchen cabinets - belong to a group of products being sold at unfairly low prices in the U.S., and that those products would be subject to antidumping and countervailing duties.
The Department's final scope specifically states that Chinese hardwood plywood used in kitchen cabinets would be subject to antidumping duties unless it is packaged for sale to a consumer end-user of the cabinet - with all components necessary to assemble the cabinet in a single, discreet package.
Soon after Commerce's ruling, Chinese producers began to ship plywood under four other codes, from 4412.39.10.00 through 4412.39.50.00. These are the codes apply for softwood-faced plywood, which has lower tariffs.
The ITC issued its final determination last November, activating significant tariffs - nearly 200 percent - on some on imports of Chinese hardwood, voting 4-0 that the domestic industry is materially injured, or threatened with material injury, by reason of these dumped and subsidized imports.
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