First AD Duty Evasion Investigation Under EAPA Concluded, Others Advanced
U.S. Customs and Border Protection has announced its first-ever final determination in an antidumping duty evasion investigation under the Enforce and Protect Act and advanced several associated proceedings, all covering steel wire hangers from China. A CBP press release states that these investigations have resulted in CBP preventing the evasion of over $33 million dollars in AD duties annually.
The EAPA, part of the Trade Facilitation and Trade Enforcement Act, gave CBP a significantly expanded role in investigating AD/CV duty evasion and the authorities to match. Under CBP regulations implementing the EAPA any interested party, including competing importers and federal government agencies, may submit allegations that AD/CV duties are being evaded; e.g., through misrepresentation of the goods’ true country of origin, false or incorrect shipping and entry documentation, or misreporting of the goods’ physical characteristics.
CBP has broad authority to conduct investigations of these claims and can impose initial remedial measures that could interrupt a supply chain in as little as 90 days. Any final determination of evasion may be met with not only AD/CV duties but also other enforcement measures such as civil or criminal investigations.
CBP states that it has initiated 14 evasion investigations since EAPA came into force in August 2016.
Hangers – Final Determination. In October 2016 CBP initiated an evasion investigation concerning the AD duty order on steel wire garment hangers from China and subsequently determined that there was a reasonable suspicion that the importer at issue had evaded this order by transshipping hangers from China through Thailand. As a result, CBP imposed the following interim measures: rate adjusting subject goods that had been entered as not subject to this order, requiring live entry (i.e., all entry documents and duties must be provided before cargo is released into U.S. commerce) for all future imports for the importer, suspending liquidation of subject goods entered on or after Oct. 11, 2016 (the date the investigation was initiated), and extending the period for liquidation for all unliquidated entries that entered before that date.
CBP then issued a request for information to the importer seeking additional information on company import policies and procedures, purchase and sales records, corporate structure, and other matters. This request was in addition to the CF28 (Request for Information) sent to the importer during the initial stage of the investigation. CBP sent a similar request to the reported supplier seeking information on its manufacturing process, the source of its raw materials, its corporate structure and affiliations, and the source of any finished hangers. Neither the importer nor the supplier responded.
Following an on-site visit to Thailand and a review of trade data gathered during the course of the investigation, CBP has concluded that there is substantial evidence that the importer evaded AD duties by transshipping wire hangers from China through Thailand. As a result, CBP is continuing the interim measures against the importer, including AD cash deposits at the China-wide rate of 187.25 percent, live entry, and a higher continuous bond level. CBP also said it would pursue additional enforcement actions (e.g., initiating section 1592 penalty proceedings against the importer and referring this matter to U.S. Immigration and Customs Enforcement for civil and/or criminal investigation, both of which were requested by the complainant) as appropriate.
The importer argued that the assessment of AD duties and penalties is inequitable because it was an innocent victim of an evasion scheme, had no knowledge of it, and did not profit from it. The importer said it believed the country of origin of the hangers was Thailand and that CBP should go after those entities that structured the scheme and profited from it. However, CBP responded that the statutory definition of evasion focuses only on whether insufficient cash deposits or bonds were made, not the culpability of the parties.
Hangers – Interim Measures. Also as a result of this final determination the sole remaining U.S. producer of wire hangers filed additional allegations that eight importers were evading the AD duty order by transshipping Chinese-origin hangers through Malaysia. On-site visits found no production of wire hangers at any of the cited locations in Malaysia, leading CBP to issue a consolidated notice finding a reasonable suspicion that each of the eight importers is engaged in evasion through “a complex and coordinated scheme.”
As a result, CBP has imposed the following interim measures against each importer: rate adjustment of entries of subject goods that entered the U.S. as not subject to this AD duty order, live entry for all future imports, rejection of any entry summaries and requirement to refile those that are within the entry summary reject period, suspension of liquidation for any entry entered on or after May 12, 2017, extension of the period for liquidation for all unliquidated entries entered before that date. In addition, for any entries that have liquidated and for which CBP’s reliquidation authority has not yet lapsed, those entries will be reliquidated accordingly. CBP will also be evaluating each importer’s continuous bonds to determine their sufficiency.