Hearings and Business Meetings
411 West 8th Street, Medford, Oregon Medford City Council Chambers 12:00 PM
Executive Director, Commercial Targeting and Enforcement, Office of Trade, Us Customs and Border Protection
Statement of Vera Adams
Executive Director, Commercial Targeting and Enforcement
Office of International Trade
Department of Homeland Security
U.S. Customs and Border Protection
Committee on Energy and Natural Resources,
Subcommittee on Public Lands and Forests
May 30, 2007
Good Afternoon Chairman Wyden, and members of the Committee, it is a privilege and an honor to appear before you today to discuss imported Chinese plywood. We appreciate the support that Congress provides to the Department of Homeland Security as U.S. Customs and Border Protection (CBP) performs its important security and trade enforcement mission while simultaneously facilitating the flow of legitimate trade and travel that is so important to our nation’s economy. As the guardian of our nation’s borders, CBP recognizes the importance of enforcing trade laws that help protect the forest product industry and the communities that depend on it.
I want to first express my gratitude to you and the committee and to the Hardwood Plywood & Veneer Association, the Hardwood Federation and other associations that have played a role in bringing to our attention certain enforcement concerns that pertain to the import of plywood into the United States. As the volume of trade increases, information from domestic associations plays an ever more important role in assisting CBP in identifying illicit activity.
To ensure successful enforcement of our nation’s trade laws, CBP has developed ‘Priority Trade Issues’ or ‘PTI’s’ to help facilitate legitimate trade while protecting the American economy from unfair trade practices and illicit commercial enterprises. The PTI’s are specific commodities or other trade topics upon which CBP has decided to focus its resources. These PTI’s are: Antidumping and Countervailing Duty, Intellectual Property Rights, Textiles and Wearing Apparel, Revenue, Agriculture, and Penalties. The concerns that have been raised with respect to plywood importations into the United States, which are within the authority of CBP to address, cross over many of the PTI’s.
As you are aware, CBP has been examining certain issues related to plywood importations since you first brought this to our attention in November of 2006. As was stated in your letter to Commissioner Basham, it is alleged that the plywood is being misclassified as duty free under the tariff for birch-faced plywood instead of, for example, oak-faced plywood with an 8% duty rate.
CBP is quite familiar with the subject of tariff misclassification and we have initiated other enforcement actions with similar types of merchandise. For instance, in August of 2005, CBP worked with the Hardwood Federation to investigate misclassified imports of hardwood flooring from China, Brazil, and Canada. CBP conducted a national operation targeting all imports entering under specific tariff classifications from the three target countries and found widespread misclassification. As of today’s date, CBP has discovered more than 120 importers misclassifying the hardwood flooring, using a duty free or lower duty rate provision. Approximately $30 million in potential lost revenue has been identified.
Regarding plywood, in recent months, CBP has conducted several meetings with industry associations and representatives such as the Hardwood Plywood & Veneer Association, the Hardwood Federation, and the Industry Trade Advisory Committee on Forest Products (ITAC 7) to gather information to assist us in our enforcement actions. Based on the allegations raised in your letter to CBP and upon information provided by these industry representatives, CBP initiated a nationwide operation to verify the allegation of misclassification and misdescription. We learned from the hardwood flooring operation that misclassification and misdescription in this industry is rampant. We are able to use what we learned in hardwood flooring and apply it to our current operation.
A significant number of shipments have already been targeted for intensive examination. As part of the operation, sections of plywood are cut from the arriving shipments and sent to CBP’s Laboratory and Scientific Services (LSS) Division for analysis to determine whether the plywood face consists of ply birch or other species. Once the lab analysis is complete, our import specialists at ports of entry will determine the proper tariff classification and amount of duty owed. At this point in time our lab analyses are ongoing and the results of our enforcement actions are pending.
CBP recognizes that finding violations is only part of an enforcement picture. Follow up to ensure continued compliance is essential to any enforcement action and is standard practice. Through data and trend analysis, document reviews and examinations of merchandise, CBP continues to monitor hardwood flooring shipments and will monitor plywood imports after this current operation is complete.
Mr. Chairman and members of the committee, as CBP moves forward in addressing the subject of misclassified plywood imports, we look forward to working in partnership with the Congress and industry stakeholders to build on our accomplishments to date and focus on achieving the desired results. I thank you for this opportunity to testify.
I will be happy to answer any of your questions.