On January 27, 2022, the US Customs and Border Protection (CBP) issued a final “safe decision” under the BGI Group (known as the US Cabinet Depot). CBP has ruled that BGI has fraudulently escaped the anti-dumping AD and CVDs on wooden cabinets and vanities imported from Vietnam. It is known that some parts of Vietnam have been added, but most of the cabinets are made in China.
BGI HOCA Kitchen and Bath Products International Co. It has been confirmed that he has started importing ready-made cabinets from a Vietnamese company called “HOCA Vietnam”. And he had a long history of importing these goods directly from China. US import data confirms that cabinets imported from Vietnam have increased since April 2020. HOCA Vietnam, founded in Hangzhou HOSA Kitchen and Bathroom in China, also said it could not produce the size of cabinets for the United States and imported cabinet doors and frames from a parent company in China.
HOCA Vietnam also noted that “significant” (CBP 2022, p. 2) imported wooden furniture from China into the ‘ready-to-assemble’ kit from ARGI. In addition, according to the Industrial Authority, “60% of the cost of a finished cabinet is represented by cabinet doors and drawers {{Typical thumb rules include doors, drawer fronts and frames 2/3. Add a more complete cabinet than the price and price. (CBP 2022, p. 15). In this case, in the official edition (CBP 2022), this observation is important in light of the requirements of Vietnam’s original certificate – if 40% or more of the product is made abroad, it should not be named (legally). “Made in Vietnam”
The decision means that the largest share of imported wooden cabinets from Vietnam is now subject to tariffs, according to the US Department of Commerce, which could reach 59-84 percent. Moreover, these rates will apply again to the “millions” of cabinets from Vietnam starting in March 2020. BGI alone imported more than $ 40 million worth of cabinets from Vietnam in 2020, and could be responsible for millions of dollars in unpaid taxes. “This decision should serve as a strong defense against others who are currently considering avoiding AD / CVD orders,” said Betty Natz, chief executive of the Kitchen Cabinet Manufacturers Association (KMSMA) (Adams 2022).
The case provides a precondition for the “transitional” legal definition and a product may change its country of origin at any stage of the process. The decision won BGI’s defense that AD / CVDs will not be implemented as Chinese authorities embark on further processing in the country. In the case of Vietnam, China’s recent investment in Vietnam’s timber industry to exploit low labor and raw materials has also led to a fraudulent transition in the supply chain. Strategies for assembling cabinets (or other products) from China to transit countries and / or merging with parts of the transit country have been working to ensure that companies such as RGI remain legal and discharge their obligations. . But this strategy now seems to be very dangerous for the protagonists.
In the past, there have been two similar issues regarding the transport of kitchen cabinets to the United States. In one of these cases, the plaintiff was successful in the transition through Malaysia, in the other, in the case of the transition through Cambodia, as well as in the BGI as a defendant, and in the end, the BGI was not successful due to lack of evidence. To flee ”
Successfully, a company called MasterBrand has made rapid progress in Malaysia’s cabinet products, and has hired a private investigator to find out what’s going on. MasterBrand then submitted a document to US Customs stating that Chinese cabinets and waste items manufactured in China are being re-packaged in Malaysia and exported to the United States. In May 2021, Master Brand, with the support of AKCA, submitted 11 investigative requests under the Compulsory and Protection Act. CBP subsequently received “substantial evidence” that four importers had violated AD / CVD obligations.
While there is no evidence to support the allegations, the wood trade data analyzed by Forrest Trades seems to support allegations that Chinese timber products are being smuggled into the United States, perhaps through Vietnam. Vietnam wood products targeted by US tariffs have increased significantly since 2018, while many non-target products from China have decreased from 2017 to 2020 (Figure 2). For example, Vietnam’s customs import data shows that key informants in Vietnam are often hidden or hidden from China. While the influx of goods from China to Vietnam is not a problem, it will raise the flag that there may be a reversal to avoid trade tariffs, and Vietnam’s claim must be diligently verified.
Figure 1. Vietnamese wood imports from China at a price of 2016-2020 (Vietnam Customs data)
Source: Forest Trends, VIFOREST, FPA Binh Dinh, HAWA and BIFA Research Group. 2021. Vietnam – China Wood Trade Report 2015 – 2020: Conditions and trends. Hanoi
Figure 2. Percentage change that Vietnam will import from China 2017-2020
At the same time, Vietnam’s exports to the United States increased significantly, but China’s exports to the United States weakened. Exports of these products increased by 93 percent from Vietnam to the United States in 2018-2020; Compared to 33% in 2016-2018; And the number of furniture and seats (paired) is 118 per cent in 2018-2020 compared to 13 per cent in 2016-2018. Among them were wooden furniture (including rooms) and seats. By 2020, Vietnam will account for 92 percent of its exports to the United States. Although relatively small, the volume of escorts from Vietnam to the United States increased by 176 percent in 2018-2020 and 23 percent in 2016-2018 (see Figure 3).
Figure 3. Vietnamese wood products will be exported to the US in 2015-2020 value
While the disappearance of AD / CVD is the target of these CBP tests, the recent US / Vietnam 301 investigation focused on the importation of timber and timber from Vietnam. Vietnam has made great strides in developing VNTLAS to reduce its high-risk wood and wood products, but similar policy processes in China have failed despite large-scale smuggling. Gathered into China’s supply chain. VNTLAS must ensure that the legitimacy of complex supply chains from China is properly prepared and implemented in order to effectively monitor the legitimacy of such highly integrated kitchen cabinets and components.
References
CBP 2022. January 27, 2022. EAPA Case No. 7603. Public Version. U.S. Customs and Border Protection.
https://www.cbp.gov/sites/default/files/assets/documents/2022-Feb/01-27-2022%20-%20TRLED%20-%20 Advertising% 20 of% 20Determination% 20% 28508% 20Compliant% 29% 20-% 20% 287603% 29% 20-% 20PV.pdf
Larry Adams. 2022. U.S. Customs and Border Protection U.S. Cabinet Depot finds escape from cabinet duties. February 4, 2022. https://www.woodworkingnetwork.com/cabinets/us-customs-border-protection-finds-us-cabinet-depot-evading-cabinet-duties
Schagrin Associates. 2022. Customs practices on the duty of the Cabinet Cabinet. January 28, 2022
https://www.schagrinassociates.com/post/customs-acts-on-kitchen-cabinet-duty-evasion
Robert Dalheim. 2021. Customs cabinet importers flee China tax by transporting via Malaysia. Woodworking Industry News. September 21, 2021
https://www.woodworkingnetwork.com/news/woodworking-industry-news/customs-finds-cabinet-importers-evaded-chinese-duties-transshipping
Kitchen and bathroom design news. US action reported in China cabinet, smugglers fleeing tariffs. A.D.
U.S. Customs and Border Protection. EAPA Case N0. 7520 Public Version. July 21, 2021 https://www.cbp.gov/sites/default/files/assets/documents/2021- July / 07-21-2021% 20-% 20 TRLED% 20-% 20Final% 20Determination% 20Notice% 20% 28508% 20 Respectable% 29% 20-% 20% 287520% 29% 20-% 20 PV.pdf
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