Plywood Case Debrief & Aftermath IWPA Annual Meeting St. Petersburg, FL

Transcription

1 Plywood Case Debrief & Aftermath IWPA Annual Meeting St. Petersburg, FL March 6, 2014

2 ITC Case at a Glance AD and CVD Petitions Filed (Sept. 27, 2012) ITC Preliminary Affirmative Injury Determination (0-6 loss) (Nov. 28, 2012) CVD Preliminary Duties Ranging from percent (Mar. 14, 2013) AD Preliminary Duties Ranging from percent (May 3, 2013) CVD Final Duties Ranging from percent (Sept. 23, 2013) AD Final Duties ranging from percent (Sept. 23, 2013) ITC Vote: Negative Final Determination (5-0 win) (Nov. 9, 2013)

3 How Did AAHP Win? Organized early and effectively; counsel got great support from the clients! Set early goal of winning at the ITC final (from slide shown at last year s conference: This is our goal victory at the ITC Final Phase. ) Had consistent theory of case that was supported by current facts gathered by the ITC itself rather than by stale gripes going back to 2007 or earlier. Showed how all pieces of the puzzle, when put together, confirmed our theory of the case and contradicted the other side s. Never allowed the opposition s political maneuvers and P.R. machine to overtake the fundamental legal case which was based on facts.

4 FINANCIAL IMPACT OF WINNING Value of Plywood Imports Covered by Case: $750 million (2012 imports according to DOC) Duties Saved: $550 million annually Kitchen Cabinet Industry Sales: $8.6 billion

5 Appeals to the Courts Petitioners appealed the ITC negative to the U.S. Court of International Trade (CIT) in New York. This is a special court that just hears trade and customs matters. A judge will hear the case over the next 1 to 1.5 years and will issue a decision whether the ITC s decision was supported by substantial evidence. If not, the judge will remand the case by sending it back to the ITC for further consideration. This could go on for several years.

6 Appeals to the Courts The judge cannot order the ITC to make any specific conclusion. However, the judge can guide the result by eliminating conclusions that are not supported by facts or are otherwise unlawful. The only way for the ITC to change its decision is to decide to hold a new vote. In most cases, the ITC prefers to fight to support its original conclusion and does not hold a new vote.

7 Appeals to the Courts If the ITC changes its vote in the future, Customs would then suspend liquidation of entries. AAHP is now organizing for the appeal fight and needs industry support The Petitioners ITC appeal is separate from individual companies appeal of the DOC AD and CVD calculations

8 CBP Focus on Plywood Imports Expected to Be Lingering Effect of ITC Case Petitioners alleged lots of dirty tricks Use of illegally-sourced wood Non-compliant with CARB PS-1 products passed-off as PS-2 ( devious work around to a lower duty. ) Mislabeling/misrepresentation (birch back said to be face); wrong panel thicknesses; Russian logs misrepresented to avoid logging concerns

9 CBP Audits: On the Rise Average # of Audits/Year : 350 Estimated # of Audits in 2013: 680 What happened? Senator Grassley asked the DHS Inspector General to audit the auditors. The resulting report, released in late 2012, found weaknesses and need for more focus on revenue collection.

10 CBP Audits: Early-Warning Signs You get CBP Form CF-28 ( Request for Information )

11 CBP Audits: Early-Warning Signs You get CBP Form CF-29 ( Notice of Action or Notice of Proposed Action )

12 CBP Audits: Early-Warning Signs CBP calls to tell you that you have been placed in the audit pool or to schedule a visit.

13 How Does CBP Decide Who to Audit? CBP uses formulas incorporating risk factors to identify companies for audit Certain activities have higher risk factors, such as trade in AD/CVD products E-Allegations, referrals from port Top 5000 Importers are supposed to be audited (Numerous IWPA members are in the Top 5000). CBP Office of Regulatory Audit employs 394 people.

14 Types of Audits Single-Issue (formally Quick Response ) CBP looks at one high-risk issue, i.e., classification, AD/CVD Typically lasts one year with 2-3 site visits by CBP personnel totaling 7-10 days CBP will look at all aspects of the importers compliance, but typically CBP limits its documented findings to the scope of the single-issue audit Focused Assessment More lengthy and comprehensive analysis of compliance in all aspects Can last for several years

15 Preparing for Audit The law REQUIRES companies to have an import compliance process in place Ad-hoc measures do not constitute reasonable care

16 Preparing for Audit (CBP s 7 Steps) CBP procedures are formally documented Written procedures approved by management CBP policies are up to date Do periodic testing Identify and manage risk Providing training Ensuring adequate communication within the company.

17 Possible Outcomes of Audit GOOD clean audit report Lengthen time to reaudit in the future Identify duty savings and get refunds after protests Strengthen existing procedures BAD Duty underpayments single issue audit escalates to focused assessment Importer referred for investigation Penalties (unpaid duties plus penalties of up to 100% of the declared value of goods)