President Trump & CBP Aim to Collect Unpaid AD/CVD Duties
On March 31, 2017, President Trump signed an Executive Order (EO) that addressed unpaid anti-dumping and countervailing duties. This new EO, “promotes the efficient and effective administration of U.S. customs and trade laws by establishing enhanced measures to collect duties”.
What are anti-dumping and countervailing duties (AD/CVD)?
Dumping happens when a foreign company exports goods into the U.S. and sells those goods at less than fair market value. This in turn causes “injury to the U.S. industry”. Due to this, U.S. manufacturers or businesses can file a petition with the International Trade Commission (ITC), claiming that it has suffered an injury. Once the ITC finds that evidence of an injury exists, then the Department of Commerce (DOC or the Department) will investigate the claim. If the DOC determines that dumping occurred, then Customs and Border Protection (CBP) can withhold “liquidation of entries” and collect anti-dumping (AD) duties. AD “duties are calculated to bridge the gap back to a fair market value.”
Countervailing duty (CVD) cases happen “when a foreign government provides assistance and subsidies…to manufacturers that export goods to the U.S.”. This assistance gives the foreign manufacturer an incentive to sale its “goods cheaper than domestic manufacturers”. To determine whether a countervailing duty case exists, the same process is taken as an anti-dumping case. Once it is determined that the foreign government has provided assistance, then CBP can withhold a liquidation of entry and collect a CVD duty. “CVD cases are country specific, and the duties are calculated to duplicate the value of the subsidy.”
Statistics on AD/CVD cases:
- “$14 billion of imported goods were subject to AD/CVD.”
- CBP collected $1.5 billion in cash deposits.
- By the end of the fiscal year, $2.8 billion in AD/CVD duties was still owed to the U.S. dating all the way back to 2001.
- From fiscal year 2015 to 2016, AD/CVD cash deposits increased over 25 percent.
What does this new EO require?
Under this new EO, the Department of Homeland Security (DHS) has been designated as the “head government entity”, that must establish a plan by June 29, “to require importers deemed a risk to U.S. revenue to provide security for AD and CVD liability through bonds and other legal measures”.
New requirements of DHS from this order:
- Implement “a strategy to counter violations of U.S. trade and customs laws”;
- “Interdict and dispose of inadmissible merchandise”;
- The secretary of DHS, along with the secretary of the Treasury, will make sure that CBP can provide information to intellectual property rights (IPR) holders, that there has been an IPR infringement.
- Secretary of DHS along with the Attorney General will “devise recommended prosecution practices and…ensure that federal prosecutors treat significant trade offenses as a high priority.
CBP will also be required to develop a plan within 90 days of the EO for “the interdiction and disposal of violative goods, with the ability to share information regarding merchandise voluntarily abandoned with [IPR] holders”.
To find out if your importations are under an AD/CVD scope, or to discuss any questions about AD/CVD generally, contact Diaz Trade Law at email@example.com.