CBP Announces EAPA Investigation and Interim Measures on 14 Companies for AD Evasion

CBP found reasonable suspicion that 14 importers evaded antidumping duty orders on thermal paper from Germany and South Korea, and initiated an Enforce and Protect Act investigation and imposed interim measures, according to a Jan. 24 notice.

The announcement follows an allegation filed by the Paper Receipts Converting Association (PRCA), which accused EMerchant Supplies, A2 Labels & Rolls, POS Supply Solutions, Royal Paper Products, Golden Eagle Distributors LLC, Paper Roll Supplies LLC, Lucky Heap, National POS Paper, Paper Roll Products, BuyRolls Inc., Qualita Paper Products, VBS Cal LLC, Allied Paper Company, and The Advantage Group of evading antidumping duties by importing thermal paper from Papeles y Conversiones de Mexico (PCM) into the U.S. with Mexico incorrectly marked as the country of origin. PRCA says that from May 2021 to April 2022, more than 300 entries of thermal paper converted rolls from PCM were imported while PCM itself imported thermal paper from Hansol Paper in Korea and Koehler Paper in Germany.

PRCA alleged that PCM does not produce thermal paper, but instead purchases jumbo thermal rolls from producers and simply converts that into smaller rolls. PRCA cited an International Trade Commission report from the original antidumping injury investigation, in which industry experts indicated that “they believe imports from Canada, India, Mexico, Taiwan, and Turkey are converted rolls made from jumbo thermal rolls produced” in Germany, Japan, South Korea and/or Spain.

Between May 2021 and April 2022, exports from PCM to the U.S. totaled around 6,000 tons and were valued at over $16 million. PRCA provided data from the paper industry publication Laves Chemie, which showed that in Mexico, only Krivens has a thermal paper production capacity of at least 5,000 metric tons and does not even identify PCM as a Mexican thermal paper producer. PRCA asserted that conversion of jumbo thermal paper rolls into smaller slit rolls of thermal paper is a minor operation and does not change the country of origin, citing the scope of the orders, which states that the origin of any converted rolls is the country in which the thermal paper is coated.

CBP's Trade Remedy Law Enforcement Directorate found that PRCA's allegation contained sufficient evidence to begin an investigation. Specifically, CBP said that it found to be convincing that the commercial trade data provided showed that PCM imported thermal paper into Mexico from Germany and South Korea, the industry report showing that PCM is not a known thermal paper producer in Mexico, and the trade data showing thermal paper imports from PCM in Mexico into the U.S.

The importers' questionnaire responses corroborated that PCM bought jumbo thermal rolls from Koehler, CBP said. PCM’s production flowchart for thermal paper started with cutting jumbo rolls, and photographs of PCM's production facility showed equipment for converting jumbo rolls into smaller thermal paper rolls and no machinery capable of producing paper from pulp or coating paper.

In addition, four of the importers -- Allied Paper, Paper Roll Supplies, POS Supply Solutions and VBS -- were found to have misclassified thermal paper imports as well as having transshipped through Mexico. These importers classified certain entries with Harmonized Tariff Schedule subheading 4811.90.9080, which covers "other paper, paperboard, cellulose wadding and webs of cellulose fibers, coated, impregnated, covered, etc., in rolls or rectangular (incl sq.) sheets)," despite describing the entries as “thermal paper.” In their questionnaire responses, the four importers provided invoices for PCM’s purchase of jumbo rolls produced in Germany, indicating that these entries contained in-scope thermal paper from Germany.

CBP found sufficient evidence to impose interim measures and will suspend the liquidation of each unliquidated entry that entered on or after the date of the initiation of the investigation (i.e., Oct. 17, 2022), extend the period for liquidating each unliquidated entry that entered before Oct. 17, and may take such additional measures as the commissioner determines necessary, including requiring a single transaction bond or additional security or the posting of a cash deposit with respect to such covered merchandise. CBP also will require live entry and reject any non-compliant entry summaries, will require the refiling of entries that are within the entry summary rejection period, and will evaluate the importers’ continuous bonds to determine sufficiency.