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Not user what is happening here. Are you sure that problem you are seeing is not because folders are being orphaned?
turns out the issue is because we have an apps mode EUL and EUL_US is not an apps user. In this case the -auto_refresh switch is leading to the objects being dropped as the import is unable to access the apps objects they are based on. If we run the script without the -auto_refresh switch then the import works fine.