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GAO Reviews Options for Post-Liquidation Remedy of Evasion of AD/CV Duties

Monday, November 07, 2011
Sandler, Travis & Rosenberg Trade Report

The Government Accountability Office has made public a report on options for remedying the evasion of antidumping and countervailing duties after entry liquidation. The report was submitted Nov. 2 to Sen. Ron Wyden, chair of the Senate Finance Subcommittee on International Trade, Customs and Global Competitiveness, who has held a hearing and sponsored legislation on this topic.

Remedial Options. According to the report, U.S. Customs and Border Protection has three options for collecting revenues on liquidated entries brought in through the evasion of AD/CV duties: reliquidation, duty demands and penalties.

• If CBP discovers, after an entry is liquidated, that the merchandise was brought in through evasion, it can attempt to collect the AD/CV duties by reliquidating that entry. However, in order to assess AD/CV duties in that instance CBP must first receive liquidation instructions establishing the final duty rate from the Department of Commerce, and CBP officials say they are unlikely to receive such instructions within the 90-day reliquidation period because the process of establishing a final rate under the current retrospective system can be lengthy. CBP officials believe there would be little advantage to extending the 90-day time limit because an expanded window does not significantly increase the probability that liquidation instructions would be received in time. In addition, some industry parties would likely oppose an expanded window for reliquidation given the possibility of a longer period of uncertainty about their financial liabilities.

• If CBP determines that a liquidated entry subject to AD/CV duties was brought in through evasion and it no longer has the authority to reliquidate, it can issue a duty demand for the amount of duties owed. Depending on the nature of the violation, CBP can issue a duty demand up to five years after the date of alleged violation or the discovery of fraud.

• CBP can assess penalties against a person who evades AD/CV duties, with a similar five-year statute of limitations. Penalties assessed in such cases can lead to revenue assessments that are much higher than the amounts assessed through reliquidation or duty demands.

Revenues Recovered. The report also finds that two key factors affect the amount of revenues CBP collects on liquidated entries brought in through evasion of AD/CV duties. First, the amount of duties or penalties CBP ultimately collects may be lower than the amount initially assessed due to successful protest or petition by the importer. Second, CBP faces difficulty collecting money from those who never intended to pay the duties, may be difficult to locate or have few, if any, assets in the United States.

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