Evasion of anti-dumping and countervailing duty (AD/CVD) orders is a priority trade issue for U.S. Customs & Border Protection. Evasion of AD/CVD duties can take the form of misrepresenting the country of origin, misclassification/misrepresentation of the physical characteristics of the product itself. What follows is a brief summary of the new procedures and their importance for the trade community.
Why is AD/CVD evasion bad?
In addition to the harm to revenue, domestic manufacturers and importers who are paying under the AD/CVD orders are hurt by those who do pay the AD/CVD duties, but should. For this reason, CBP is enacting a new procedure that allows an interested party to make a claim that an importer is evading anti-dumping or countervailing duties (AD/CVD) which looks back over importations for a period of 1 year.
What is CBP doing about AD/CVD evasion?
An interim rule was published in the Federal Register on August 22, 2016, and comments on the interim rule are due no later than October 21, 2016 (note: later extended to December 20, 2016). The new regulations appear as part 165 of Title 19 of the Code of Federal Regulations (19 CFR 165, et seq.). The regulations implement the provisions of the newly created 19 USC § 1517, which is entitled “Procedures for investigating claims of evasion of antidumping and countervailing duty orders.”
These new procedures are designed to give interested parties an opportunity to participate in the investigation and also requires CBP to notify parties about the outcome of a review (previously, parties were limited to sending in “tips” through CBP’s “e-Allegations” system). Upon filing a Request for Investigation by an interested party, CBP has 15 days to initiate an investigation.
If CBP decides to move forward with an investigation (note, an interested party may “request” an investigation, but CBP is not obliged in all cases to conduct an investigation), it has up to 300 days to reach a determination as to whether or not someone is evading AD/CVD orders/duties (or 360 days in complex cases).
To reach this determination, CBP may use any means it deems appropriate, but in most cases this process will at least begin by sending questionnaires to interested parties and the alleged evader of AD/CVD duties. If a party fails to cooperate in the information collection stage of the investigation, CBP may make an “adverse inference,” or in other words, assume that they are evading the AD/CVD duties.
What can CBP do if it determines someone is evading AD/CVD duties?
If CBP determines that evasion of AD/CVD duties is occurring, they can:
- Suspend liquidation of unliquidated entries of the subject imports;
- Extend liquidation for unliquidated entries that occurred before the initiation of the investigation;
- Notify the Department of Commerce to determine the applicable duty rates;
- Require that cash deposits be posted and correct duty assessments;
- Reliquidate entries;
- Refer matters to ICE for possible civil or criminal investigation; and,
- Any other appropriate enforcement action (including penalties under 19 USC § 1592)
In the first 90 days of the investigation, if CBP reasonably suspects there is AD/CVD evasion, they may require cash deposits or that a single transaction bond be posted to ensure that CBP does not lose duties that it may have a right to collect.
Is there a review of CBP’s determination of AD/CVD evasion investigations?
Most interestingly, whatever the result of the investigation by CBP, an interested party may request a de novo administrative review through CBP’s Regulations & Rulings, Office of Trade. That review must be completed within 60 business days. After administrative remedies are exhausted, a request for judicial review at the Court of International Trade can be made within 30 business days of a final administrative determination. However, bear in mind a refusal by CBP to investigate after a request for review has been received is not subject to administrative or judicial review (though I suspect that will be litigated in the future).
Want to file comments or participate in an investigation into the evasion of AD/CVD orders?
Great Lakes Customs Law is available to assist interested parties and trade organizations in preparing comments to the interim final rule that must be received by CBP by October 22, 2016 (again, now extended to December 20, 2016). If you’ve been named a respondent or have received a questionnaire from CBP about your import practices, or are interested in commencing an investigation against someone who you believe is evading anti-dumping duties imposed by CBP, give our customs law firm a call for a free telephone consultation.