Qianmen Zhengyang Gate Wide Tiananmen Square Beijing China Night

Dear Friends,

I have been remiss in posting on this blog , but I have had three oral arguments and two major filings in the Court in the last two weeks.

Last week, I also gave a major speech here in Minneapolis at a Dorsey conference entitled “Avoiding the Inferno: Making Import and Export Issues Predictable in the Year of the Dragon.”  The Dorsey conference speech was divided into three panels, which all focused on trade business with China.

The First Panel was on the Foreign Corrupt Practices Act and featured two Dorsey lawyers, J. Jackson, one of the heads of our litigation group here at Dorsey, and Tom Gorman, who is formerly with the Enforcement Division of the Securities and Exchange Commission.

The Second Panel was on antidumping, countervailing duty, and Customs law.  In addition to myself and Emily Lawson, my colleague, who specializes in Customs law issues, Don Bonker, the Executive Director of APCO, joined me in discussing the US Politics Behind the China Trade situation.

The Third Panel was on civil and criminal litigation under the Customs law and the False Claims Act, aimed in particular at evasion of US antidumping and countervailing duty orders.  In addition to Emily and myself, another Dorsey lawyer, Ed Magarian, who specializes in Civil and Criminal litigation, including litigation under the False Claims Act, spoke about litigation with an emphasis on enforcement litigation against evasion of US AD and CVD orders by way of transshipment through third countries.

Attached are the PowerPoints that were distributed for that speech.  Avoiding the Inferno_FINAL_PowerPoint  If anyone wants copies of the backup materials for the speech, please feel free to contact me.


While in Court and speaking in Minneapolis, however, the US China Trade War continued with developments in a number of different litigation areas, including Trade, Customs, 337/Patent litigation, Antitrust and Securities law.



Eurobiz in China published my article on the Solar Cells Trade War.  See the attached document.  FINAL PUBLISHED SOLAR TRADE WAR ARTICLE


Last week Commerce initiated antidumping and countervailing duty review investigations against a number of products from China, including Wood Flooring, Hand Trucks and Pencils.  Attached is the initiation notice that lists the Chinese companies in the review investigation.  WOOD FLOORING REVIEW INVESTIGATION DOC INITIATION



For the first time since instituting its “e-Allegations” system in 2008, in January  the U.S. Customs and Border Protection (CBP) this month reported in detail on the number of allegations of trade remedy violations it was able to act upon or throw out, revealing that — in fiscal year 2012 at least — there was a significant backlog of submissions that were not handled.

Of the 149 allegations submitted, CBP “confirmed and took action on” only 15 of them, and found no violation or insufficient information for another 11. That leaves 123 allegations for which “work continues,” according to a Jan. 14 release on the agency’s fiscal year 2012 antidumping (AD) and countervailing duty (CVD) enforcement results.

Of the total 289 AD/CVD orders in place as of the beginning of this year, 118 were against imports from China — more than any other country, according to the U.S. International Trade Commission. Chinese exports also account for the bulk of the duty circumvention problem.

CBP has indicated in previous reports that e-allegations can be seen as a black hole.  This may be why many competing companies will use the private right of action for Customs fraud under the False Claims Act more to enforce AD and CVD orders.

Customs mentioned that uncollected AD/CVDs on imports from China were a “major component” of the overall duties that CBP was not able to collect, the report said. “The top five AD/CVD cases for uncollected AD/CVD duties, comprising $977.6 million (or 87 percent) of the $1.1 billion in unpaid duties, all involve imports from China,” it explained.

See the attached article.  CUSTOMS E-ALLEGATION CHINA FRAUD


As indicated in the attached notice from Customs, Fiscal Year 2012 AD_CVD Enforcement Results – Antidumping/Countervailing duty (AD/CVD) enforcement is a priority trade issue for U.S. Customs and Border Protection (CBP). CBP stepped up its agency-wide efforts in Fiscal Year 2012 to enforce AD/CVD laws in coordination with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

In FY 2012:

CBP and HSI seized 57 shipments with a domestic value of $13,681.270.

CBP levied over 50 monetary penalties for $24,256.361 on importers for fraud, gross negligence, and negligence for AD/CVD violations under 19 USC 1592.

CBP completed over 50 audits of importers of AD/CVD commodities and identified AD/CVD discrepancies with a value of approximately $41 million, and so far collected over $13 million.

CBP in partnership with U.S. industry expanded the Trade Intelligence program and received 149 allegations of AD/CVD evasion and noncompliance.

CBP conducted several Special Operations including Operation Piping Hot in August 2012 targeting illegal importations of steel pipe and tubing.


On January 22, the ITC initiated a 337 patent investigation on Paper Shredders against a number of Chinese companies, including:

New United Co. Group Ltd. of Changzhou, Jiangsu, China;

Jiangsu New United Office Equipment Co. Ltd. of Yaoguan, Jiangsu Province, China;

Shenzhen Elite Business Office Equipment Co. Ltd. of Shenzhen City, Guangdong Province, China;

Elite Business Machines Ltd. of Mong Kok, Kowloon, Hong Kong Special Administrative Region, China;

New United Office Equipment USA, Inc., of Northbrook, IL;

Jiangsu Shinri Machinery Co. Ltd. of Changzhou, Jiangsu Province, China;

Zhou Licheng of Changzhou City, Jiangsu Province, China;

Randall Graves of Changzhou City, Jiangsu Province, China; and

“Jessica” Wang Chongge of Xi’an City, Shaanzi Province, China.

The Petitioners are Fellowes, Inc., of Itasca, IL, and its Chinese subsidiary, Fellowes Office Products (Suzhou) Co., Ltd.


SMP Logic Systems Versus Guangdong Yifang Pharmaceutical Co., Ltd.

Plaintiff SMP Logic Systems, LLC sued Guangdong Yifang Pharmaceutical Co., Ltd. (“Yifang”) for patent infringement on certain pharmaceutical products.  See attached complaint. GUANGDONG YIFANG PATENT


Swipe sued Pax Global in Hong Kong and Hi Sun Technology in China for patent infringement for imports of payment terminal products and/or systems capable of encrypting confidential account information (including at least the PAX Technology SP30 product and/or system).  See attached complaint.  PATENT FINANCIAL SYSTEMS


The Vitamin C antitrust trial against Chinese companies will start up next month in the Eastern District of New York.  See the attached scheduling order.


In January, several Class Action Securities cases were filed against Chinese companies.  The first case is Jiewen Zeng vs Qiao Xing Mobile Communication Company, Zhi Yang Wu, Rui Lin Wu, David Li and Kok Seong Tan

The second case is Chris Basnett v. Longwei Petroleum Investment Holding Ltd., Cai Youngjun, James Crane, and Michael Toups.

The third case is Michael Dao vs. Silvercorp Metals Inc. and several individuals.



Last Friday, the Chinese Ministry of Commerce (“MOFCOM”) China levied anti-dumping duties on U.S. and EU imports of ethylene glycol monobutyl ether and diethylene glycol monobutyl ether, two chemicals commonly used in varnishes and paint solvents.  The antidumping duties against US companies range from 10.6% percent for Eastman Chemical Co., 14.1% for Dow Chemical Co. and a 10.6 for Equistar Chemicals LP, as well as a 18.8% for BASF SE, a German chemical company, 9.3 % for Swiss company Ineos Group Ltd. and 10.8% percent rate Sasol Germany GmbH.

Other U.S. companies will face a US wide rate of 14.1 percent and other EU Companies an EU wide rate of 10.8 percent.

What goes around, comes around and the Trade War continues.

If anyone has any questions about these cases or wants additional information, please feel free to contact me.

Best regards,

Bill Perry

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