On July 22, Bradford Muller, vice president of corporate communications at AFS Corporate Member Charlotte Pipe and Foundry, appeared before a House Judiciary Subcommittee on “Foreign Abuse of U.S. Courts.” The bipartisan hearing was chaired by Rep. Darrell Issa of California (R-48th). Muller provided testimony on trade fraud being committed by producers of cast iron soil pipe and fittings in China. Headquartered in Charlotte, North Carolina, Charlotte Pipe and Foundry produces cast iron and plastic pipe and fittings for plumbing applications.

In 2017, through the Cast Iron Soil Pipe Institute (CISPI), the industry filed anti-dumping and countervailing duty cases again Chinese manufacturers. The Department of Commerce determined that Chinese exporters had undersold and subsidized cast iron pipe in the U.S. at up to 345% less than fair value, and up to 494% less than fair value for cast iron fittings. Duties to counteract these unfair trade practices have been in effect since August 2018.

“In response, unscrupulous foreign entities have turned to transshipping cast iron pipe and fittings through third countries and deploying other forms of evasion and customs fraud to obscure the true origin of their products to avoid paying these tariffs,” Muller testified.

“In the seven years since our orders were issued, U.S. Customs and Border Protection has identified 10 producers who were actively transshipping Chinese soil pipe and fittings––primarily through Malaysia and Cambodia,” Muller said. “When Customs investigated the locations of these alleged manufacturers in these countries, they found an empty warehouse and a bus stop, but no foundries.”

According to Muller, despite Custom’s efforts, they have been unable to stop the illegal flow of imports. “The Chinese entities have no intention of ever paying the duties. When caught transshipping, the companies simply dissolve, and the bad actors reconstitute under a new shell company to resume their unlawful activity,” Muller said.

Chinese shippers have been so successful at evading U.S. trade enforcement that they freely advertise their capabilities to “avoid high duties by exporting goods from China to Southeast Asian countries where we change containers and then re-export to the destination country.”

Multiple national news outlets have reported on the many ways Chinese companies exploit gaps in domestic enforcement to bypass tariffs, duties, and other trade restrictions. Charlotte Pipe was featured in a front-page story in the New York Times on May 27 lamenting the “whack-a-mole” nature of the process of tracking and shutting down fraudulent shell companies––only to see them right back in business under a new name.

“Chinese producers of our products have successfully evaded more than $44 million of dumping and countervailing duties––money they have robbed of the U.S. Treasury,” said Muller. “Congress needs to step in and provide industry with far stronger remedies.”