Chicago 17/03/2016 - The US Department of Commerce (DOC) said late on Tuesday this week that it will start an investigation into China Zhongwang Holdings for allegedly circumventing import duties for aluminium extruded products.
The multi-month saga stems from a petition from the US Aluminum Extruders Council (AEC) accusing Zhongwang of "systematically and illegally evaded duties" on 5050 alloy extrusion products imported into the US.
The AEC has argued that Zhongwang was exporting alloy extrusions through Mexico into the US to avoid US anti-dumping and countervailing duties. The DOC said it found sufficient basis to issue an inquiry and that the department will determine whether the imports are subject to violations.
Zhongwang has denied any violation of the existing act and said the US accusations have "neither factual nor legal foundations".
Currently, 5050 alloyed aluminium extrusions are not expressly covered by the law but the DOC will determine whether the issue is actionable under sections 781(c) and 781(d) of the anti-dumping and countervailing act implemented in May 2011.
"The alleged scheme involves hundreds of millions of pounds of aluminium extrusions that are simply cut and welded into aluminium slabs," the AEC said in an October statement. "Upon entering the US these extrusions are being identified as ‘pallets’ even though the testimony the AEC has gathered makes it clear the sole purpose of these extrusions is to re-melt them back into billets."
In the interim, the US government will not suspend imports. But if the department issues a preliminary affirmative determination, US Customs and Border Protection will be instructed to suspend liquidation and require a cash deposit of estimated duties for each unliquidated merchandise.
In August 2015, a previously unknown research house called Dupre Analytics alleged that Zhongwang was exporting lightly fabricated aluminium products to Mexico, Vietnam and Malaysia to avoid the tax duties.
China currently has a 15-percent duty on the export of primary aluminium but shipments of semi-finished and finished metal are tax-free. The country even offers a refund of value-added tax (VAT) on exports of some products, reducing the cost and making it more competitive in foreign markets.
"We applaud the DOC’' decision to initiate an anti-circumvention investigation," Jeff Henderson, director of operations for the AEC, said. "We look forward to the industry receiving relief from this duty evasion scheme."
(Editing by Mark Shaw)