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 info@diaztradelaw.com.
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