U.S. Trade Laws
Understanding the Importance of Correctly Declaring and Depositing Antidumping and Countervailing Duties.
Enforcement of U.S. trade laws, specifically those regarding antidumping and countervailing duties (AD/CVD), is a topic taking center stage.
On January 27, 2010, U.S. President Barack Obama presented his annual State of the Union Address. Two paragraphs of the Address spoke to the National Export Initiative (NEI), an initiative with the goal of promoting and increasing U.S. exports by improving many of the conditions that directly affect exporters
On February 4, 2010, Department of Commerce Secretary Gary Locke announced some of the details of the NEI. Among which was the enforcement of international trade laws in order to increase access to foreign markets. On March 16, 2010, President Obama issued Executive Order 13534, which officially stated the goals of the NEI. One of these goals is Reducing Barriers to Trade. According to the text of the NEI, "The United States Trade Representative, in consultation with other members of the Export Promotion Cabinet, shall take steps to improve market access overseas for our manufacturers, farmers, and service providers by actively opening new markets, reducing significant trade barriers, and robustly enforcing our trade agreements."
The goal announced in the Executive Order for the NEI coupled with the goals outlined by Secretary Locke have increased attention surrounding international trade law; specifically with regard to antidumping and countervailing duty (AD/CVD) law. The Departments of Homeland Security, Commerce and Justice are just three of the government agencies aiming to enhance enforcement efforts in this area.
The Department of Homeland Security
The subject of antidumping and countervailing duties has been a Priority Trade Issue (PTI) for the Department of Homeland Security's (DHS) U.S. Customs and Border Protection (CBP) since 2003. As stated on CBP's website, PTIs are those which the agency focuses on due to their high-risk nature. AD/CVD became a Priority Trade Issue to help ensure the detection and deterrence of circumvention of AD/CVD law.
In Senate Report 111-222 to the 2011 DHS Appropriations Bill, which recommends how funds should be allocated among DHS agencies and activities, there is a section specifically on antidumping and countervailing duty enforcement. This section specifies that sufficient funds will be available within the CBP budget to continue ongoing enforcement of antidumping and countervailing duties. In addition to this budgetary allotment, CBP is instructed to work with Commerce, the Department of the Treasury (Treasury), and the Office of the United States Trade Representative (USTR) to increase efforts for collection of antidumping and countervailing duties, and to submit yearly reports on such efforts. The report directs CBP to include information on its efforts to collect unpaid antidumping and countervailing duties and also on the amount and number of unpaid bills on each AD/CVD order.
The Department of Commerce
The Department of Commerce, which is a key agency regarding AD/CVD orders through its International Trade Administration (ITA), is stepping up its game as well.
In a press release issued in August of 2010, Commerce announced 14 proposed measures focused on illegal practices on imports from non-market economies. After an ITA review of Commerce's existing trade remedy practices for ways to improve enforcement, Commerce developed these proposals with the goal of strengthening the enforcement of AD/CVD laws.
Some of the proposals are quite significant. For instance, an individual foreign company would no longer be able to apply for relief from an antidumping or countervailing duty order by submitting proof that there are no dumping margins, or no subsidy occurring; companies may only be granted relief upon the expiration of the country-wide duty rates. In another example, Commerce is proposing to require cash deposits for antidumping and countervailing duties from the time a case is in preliminary statu. Currently, importers have the option of posting a bond for these duties until a case becomes an order. In a third example, Commerce is considering including export taxes or value added taxes (VAT) into the calculation of dumping margins, a practice which is currently only done for market economy countries.
In addition to Commerce's proposed enforcement enhancements, a bill has been introduced into the Senate which would expand the Department's investigative authority if it were to become law. Senate bill 3725*, known as the "Enforcing Orders and Reducing Circumvention and Evasion Act of 2010" or the "ENFORCE Act," empowers Commerce to conduct investigations of instances where evasion of antidumping or countervailing duties may be occurring due to the importation of misrepresented merchandise. Currently, these types of investigations are handled by CBP, and the ENFORCE Act does not lessen this role. The bill encourages cooperation and the sharing of information between the two agencies.
The ENFORCE Act also contains a provision requiring that once an affirmative preliminary determination is made on an evasion case, that liquidation of subject entries be suspended and cash deposits be made for the antidumping or countervailing duties. The bill proposes to shorten time limits in which both preliminary and final determinations of evasion are made.
The Department of Justice
The Department of Justice (DOJ) could be a new player in the realm of AD/CVD enforcement. Senate bill 3080*, known as the "Unfair Foreign Competition Act of 2010," proposes the option of judicial determination of injury in certain cases involving dumping or subsidization of imported merchandise. This bill, if passed, would allow parties petitioning for an antidumping or countervailing investigation to choose between a civil injury determination, made by a local U.S. District Court, and an injury determination made by the International Trade Commission (ITC).
If a petitioner elects the DOJ to make an injury determination on a potential dumping or subsidization case, the ITC would still conduct the investigation. The results of the investigation would be used by the district court to make the injury determination.
Due to the amount of attention it is receiving, the subject to antidumping and countervailing duty enforcement proves to be extremely important in the current regulatory climate. The possibility of increased enforcement by more government agencies, along with the cooperation and data sharing between those agencies, could easily create an even more stringent and more focused AD/CVD environment.
Importers should take care to review their imported goods, as well as the origins thereof, in order to determine whether imported articles fall under the scope of an AD/CVD order. If appropriate, steps should be taken to obtain a scope ruling from Commerce.
US Customs Compliance
*as of October 2010, S.3725 and S.3080 are in committee