This month’s update will cover the key events related to the scope of our tariff orders. This is the arena we’ve been focused upon in the last month. Even so, we continue to work on trade enforcement issues, which I will also address.
There are three scope issues worth noting. The first is the door threshold case. Challenged by three importers, door thresholds with Chinese aluminum extrusions that were fabricated in either China or Vietnam were under review. As reported in our trade alert in mid-January, the domestic industry prevailed in this matter. It was an important victory because our trade orders specifically mention door thresholds as covered merchandise. To have lost this case would have meant all aspects of our orders could be vulnerable to scope challenges. It is also noteworthy to mention the penetration these importers had into the domestic product. Some reported they had become the second, third, and fifth largest sellers of door thresholds in the U.S. This represents quite a bit of volume that has been returned to the domestic market.
The second is the curtain wall scope challenge. Last month I reported that the oral arguments were scheduled for February 5, 2019. However, with the government shutdown there was concern that date could be pushed out. As it turned out, the hearing took place. We should get the decision in the next six weeks to as late as several months. Reports from those in attendance were that the hearing went well, and they expect we will win this decision.
Finally, the appliance handles cases have come to a decision. The court decided to send the matter back to the Department of Commerce (DOC) to consider whether the handles meet the “finished merchandise” exclusion. For Meridian, the court directed DOC to first clarify whether the handles enter assembled. If the handles enter unassembled, DOC’s original ruling finding the handles in scope prevails. Either way, the court directed DOC, for both Meridian and Whirlpool, to address the language that the scope does not include the non-aluminum extrusion components of subassemblies or subject kits. For both cases, the court also stated that DOC must not conclude that the “finished merchandise” exclusion is inapplicable because some or all the non-aluminum-extrusion components are fasteners. While the courts ruled that the fastener exception does not apply to the “finished merchandise” exclusion, and only to the “finished goods kit” exclusion, this may present an opportunity for us to recover some of the scope with respect to subassemblies to keep assembled products with non-aluminum-extrusion components beyond fasteners in scope. This opens the door for us to work with Commerce to consider how they have been ruling on kits that include non-extruded parts and fasteners. Given the tome of this administration on trade issues, this may be a unique opportunity to tighten up the ‘kit’ language, which could lead to the DOC reversing some earlier decisions that we lost. There is much more to come on this issue.
On trade enforcement we continue to work with all resources to address trade enforcement issues. There have been several reports of suspected mislabeling of curtain wall extrusions and industrial and machine parts. If you have seen evidence of any duty evasion, please contact me so we can work together to collect data. As we collect this field intelligence and marry it with trade shipment databases we can determine if we have enough evidence to take the matter to Customs. They are eager to hear from us, but we must have enough data to motivate them to investigate. So, again, email or call me with your reports!
Thank you once again for your continued support on these matters. The case is going very well for us!
There are three scope issues worth noting. The first is the door threshold case. Challenged by three importers, door thresholds with Chinese aluminum extrusions that were fabricated in either China or Vietnam were under review. As reported in our trade alert in mid-January, the domestic industry prevailed in this matter. It was an important victory because our trade orders specifically mention door thresholds as covered merchandise. To have lost this case would have meant all aspects of our orders could be vulnerable to scope challenges. It is also noteworthy to mention the penetration these importers had into the domestic product. Some reported they had become the second, third, and fifth largest sellers of door thresholds in the U.S. This represents quite a bit of volume that has been returned to the domestic market.
The second is the curtain wall scope challenge. Last month I reported that the oral arguments were scheduled for February 5, 2019. However, with the government shutdown there was concern that date could be pushed out. As it turned out, the hearing took place. We should get the decision in the next six weeks to as late as several months. Reports from those in attendance were that the hearing went well, and they expect we will win this decision.
Finally, the appliance handles cases have come to a decision. The court decided to send the matter back to the Department of Commerce (DOC) to consider whether the handles meet the “finished merchandise” exclusion. For Meridian, the court directed DOC to first clarify whether the handles enter assembled. If the handles enter unassembled, DOC’s original ruling finding the handles in scope prevails. Either way, the court directed DOC, for both Meridian and Whirlpool, to address the language that the scope does not include the non-aluminum extrusion components of subassemblies or subject kits. For both cases, the court also stated that DOC must not conclude that the “finished merchandise” exclusion is inapplicable because some or all the non-aluminum-extrusion components are fasteners. While the courts ruled that the fastener exception does not apply to the “finished merchandise” exclusion, and only to the “finished goods kit” exclusion, this may present an opportunity for us to recover some of the scope with respect to subassemblies to keep assembled products with non-aluminum-extrusion components beyond fasteners in scope. This opens the door for us to work with Commerce to consider how they have been ruling on kits that include non-extruded parts and fasteners. Given the tome of this administration on trade issues, this may be a unique opportunity to tighten up the ‘kit’ language, which could lead to the DOC reversing some earlier decisions that we lost. There is much more to come on this issue.
On trade enforcement we continue to work with all resources to address trade enforcement issues. There have been several reports of suspected mislabeling of curtain wall extrusions and industrial and machine parts. If you have seen evidence of any duty evasion, please contact me so we can work together to collect data. As we collect this field intelligence and marry it with trade shipment databases we can determine if we have enough evidence to take the matter to Customs. They are eager to hear from us, but we must have enough data to motivate them to investigate. So, again, email or call me with your reports!
Thank you once again for your continued support on these matters. The case is going very well for us!
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