Importers should tighten up AD/CV duty compliance, expert says
New U.S. Customs regulations will make it easier to catch companies trying to avoid anti-dumping and countervailing duties.
Importers need to double-check that products are properly classified and have accurate origination information on customs entries to avoid being the victim of stepped up U.S. Customs enforcement of unfair trade practices, according to Larry Ordet, a customs attorney at Sandler, Travis & Rosenberg.
Congress last year passed the Enforce and Protect Act, which significantly increases Customs and Border Protection’s ability to combat anti-dumping and countervailing duty (AD/CV) evasion. Dumping occurs when overseas companies sell products into another market at below the cost of production or the price charged in the home market. To protect domestic producers against predatory pricing and foreign subsidies for exporters, the government can impose higher duty rates to raise the price of the imported goods in question. A recent Government Accountability Office report identified $2.3 billion in AD/CV duties that were owed to the U.S. government, but not collected.
CBP, with better tools now and under pressure from Congress to do a better job with duty collection, is placing an increased focus on AD/CV duty collection. In August, the agency published interim rules for how it plans to change enforcement procedures for AD/CV duties.
Companies that buy goods overseas need to take a second look at product lines that are, or maybe, subject to AD/CV orders, Larry Ordet, said during an ST&R webinar earlier this month.
Compliance professionals that have been excluding a product from an AD/CV duty order because of how it is classified should verify that classification, as well as the country of origin, to make sure they don’t run afoul of the regulations, he said.
“If there’s an order on Chinese tires and you import tires from Vietnam, you better verify that they are actually being produced in Vietnam,” especially if production increases there following an order against China, he said.
Those are obvious areas that CBP will look at and that domestic producers or competitors may raise in submitting claims for an AD/CV investigation, Ordet added.
Once a claim is filed, CBP’s Trade Remedy Law Enforcement Directorate has 15 business days to initiate an investigation, assuming the claim is backed up by solid evidence. It has another 95 days to inform the relevant parties about the investigation.
It’s better to get ahead of an investigation and self-disclose any violations because the penalties will be much lower, Ordet said.
The Justice Department’s increased use of the False Claims Act to go after companies accused of defrauding the government is another reason for companies to tighten up their compliance programs and quickly disclose any violations they find, he said.
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