MINNEAPOLIS, MN --The U.S. Secretary of Commerce has determined that U.S. imports of quartz surface products manufactured in China and processed in Malaysia are covered by the antidumping and countervailing duties (“AD/CVD”) orders on imports from China.
In 2018, Malaysia exported zero quartz surface products to the United States. The following year, after the Commerce Department issued AD/CVD orders on quartz surface products from China, exports from Malaysia began to skyrocket. By 2021, exports from Malaysia had reached a staggering 16 million square feet. Available evidence shows that much of these quartz surface products were manufactured in China and simply transshipped through Malaysia to evade payment of the AD/CVD duties.
“In 2018, American quartz manufacturers and their employees gained a victory, when the AD/CVD duties were imposed on illegally dumped and subsidized quartz from China,” said Marty Davis, Cambria’s president and chief executive officer. “This action opened the door for the launching and expansion of U.S. quartz manufacturing factories; total investments since that time will be upwards of $800,000,000 in new U.S. based factories, with 1000’s of new U.S. based jobs. But this Chinese merchandise illegally transshipped through Malaysia puts this and even more future investment in jeopardy.”
On February 7, 2022, the Commerce Department self-initiated an inquiry to examine whether the scope of the AD/CVD orders covers quartz surface products that are originally manufactured in China but then re-exported from Malaysia. As part of its inquiry, the agency issued questionnaires to the 23 largest exporters of quartz surface products in Malaysia. Eight of the companies that received questionnaires failed to respond to the Commerce Department. As part of its final scope ruling, the agency determined that these non-responsive companies have been exporting to the United States quartz surface products processed in Malaysia using quartz slab manufactured in China. The Commerce Department will now implement a certification requirement for all imports of quartz surface products from Malaysia to address the transshipment and evasion concerns.
The certification process will work as follows. If an importer of quartz surface products from Malaysia claims that its quartz surface products should not be subject to the payment of AD/CVD duties, the importer must meet certain certification and documentation requirements. First, an exporter of quartz surface products in Malaysia claiming its quartz surface products were not produced using Chinese quartz slab must prepare and maintain certain exporter certifications and supporting documentation. In addition, importers of such quartz surface products must prepare and maintain a separate importer certification and supporting documentation. If it is determined that the certification or documentation requirements have not been met, the importer must pay the appropriate AD/CVD duties on QSP from China. These duties currently range in excess of 300%.
Significantly, the following companies are not eligible for the scope certification process because they did not fully participate in the proceeding:
1. Bada Industries SDN BHD;
2. Ever Stone World SDN BHD;
3. Karina Stone;
4. MSI Building Supply SDN;
5. Principal Safwa (M) SDN;
6. Resstone Manufacturing;
7. SCLM Services SDN BHD;
8. Unique Stone SDN BHD; and
9. Universal Quartz.
“We were shocked at how rapidly exports from Malaysia rushed to fill the gap left by illegally traded imports from China,” said Arik Tendler, Cambria’s chief sales officer. “We have long believed that this Malaysian merchandise is evading the existing AD/CVD orders. We appreciate the Commerce Department taking this important step to ensure that the orders are strictly enforced so that Cambria and the entire US domestic quartz manufacturing industry can compete on a level playing field.”
The Commerce Department’s scope inquiry has already had a huge impact in clearing the U.S. market of Chinese merchandise that was being illegally transshipped through Malaysia to the United States to evade payment of the AD/CVD duties. After peaking at nearly 1.6 million square feet in March 2022, the month after the scope inquiry was initiated, U.S. imports from Malaysia plummeted to just 136,000 square feet in the month of July 2022.
