U.S. Customs and Border Protection Decides Not To Investigate Duty Evasion On Steel Pipe From China

Pipe is used on solar projects that receive Federal tax breaks


CHICAGO, IL – On September 14, 2016 Wheatland Tube, a division of Zekelman Industries, filed an allegation of duty evasion with the U.S. Customs and Border Protection (CBP). Today, Wheatland expresses its sincere disappointment that CBP has decided NOT to investigate its allegation of duty evasion of imports of Chinese circular welded pipe. This pipe is being used in solar projects, which may receive Federal tax breaks. “I am disheartened by this news”, said Barry Zekelman, Chairman and CEO of Zekelman Industries. “We followed the rules set forth by the Enforce and Protect Act and the EAPA regulations of Customs and Border Protection. This is a legitimate allegation by a respected U.S. manufacturer, and they have chosen to not investigate to determine if there is any foul play. This law was enacted for this type of situation. If Customs won’t even investigate the claim, which they have the data and the ability to do so, what protections are there for legitimate U.S. manufacturers who pay U.S. taxes and create jobs for Americans?”

Below is a detailed description of events that led to this point.

Background Information

  • The Government Accountability Office estimates that between 2001 and 2014, there was $2.3 billion in uncollected antidumping duties (AD) and countervailing duties (CVD).
  • The Enforce and Protect Act of 2015 (EAPA) was signed into law on February 24, 2016 (PL 114-125), providing a method to enhance AD/CVD collection efforts.
  • U.S. Customs and Border Protection (CBP) published interim EAPA regulations on August 22, 2016, allowing U.S. producers to file allegations of duty evasion for CBP to investigate.

The Allegation

  • Wheatland Tube Company, a division of Zekelman Industries, filed the first EAPA allegation on September 14, 2016, alleging that Company “X” was evading AD/CVD orders on circular welded carbon-quality steel pipe from China.
  • Wheatland provided CBP with public import data demonstrating that the 56,774 metric tons of welded pipe imported by Company “X” from China since November 2015 were subject to the AD/CVD orders, requiring cash deposits in excess of $81.5 million.
  • Wheatland acknowledged that it did not have access to the confidential CBP import data that would be necessary to prove duty evasion, and urged CBP to review such data.

CBP’s Failure to Investigate Company “X”

  • On October 17, 2016, CBP informed Wheatland that the agency declined to initiate an investigation of the allegation against Company “X”.
  • According to CBP, Wheatland’s “allegation reasonably suggests that Company “X” imported merchandise from China that may be subject to AD/CVD order. But the allegation does not reasonably suggest that merchandise was entered through evasion. Evidence of importation, without more, is not sufficient to raise a reasonable suspicion of evasion.”
  • CBP appears to have set an impossible standard for initiating EAPA investigations by requiring that domestic producers prove, not just allege, duty evasion.
  • CBP is the proper party to determine if evasion occurred since they maintain the relevant import data. It is impossible for domestic parties to make this determination.
  • In declining to initiate an investigation of Company “X”, CBP gave no indication that it reviewed its own confidential import data.
  • CBP should review its own confidential data alongside domestic producers’ allegations when deciding whether or not to initiate EAPA allegations.
  • While the EAPA provides a method to enhance duty collection efforts, CBP’s failure to investigate the Company “X” allegation casts doubt on the agency’s willingness to utilize this new law to maximize AD/CVD collection.

“At the very least, we would like CBP to use the data that they have already collected regarding the importing of this product to determine if duties were properly paid.” Says David Seeger, President of Zekelman Industries.

About Wheatland Tube

Wheatland Tube. a division of Zekelman Industries, produces a wide range of steel tubular products, including standard steel pipe, galvanized mechanical tubing, fence framework, fire sprinkler pipe, electrical conduit, elbows, couplings and nipples.

About Zekelman Industries

Zekelman Industries includes the operating divisions of Atlas Tube, Picoma, Energex Tube, Sharon Tube and Wheatland Tube. It is the largest independent manufacturer of hollow structural sections (HSS) and steel pipe, and the top producer of electrical conduit and elbows, couplings and nipples in North America. Zekelman Industries delivers a broad range of industrial solutions that build its customers’ success.

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