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CBP Lays Out Procedures for Investigating Evasion of AD/CV Duty Orders

Monday, August 22, 2016
Sandler, Travis & Rosenberg Trade Report

Continuing its efforts to implement the enhanced trade enforcement authority granted by Congress earlier this year, U.S. Customs and Border Protection has published an interim rule setting forth the procedures it will use to investigate claims of evasion of antidumping and countervailing duty orders. This rule is effective as of Aug. 22 and comments on it are due by Oct. 21.

Evasion refers to entering goods into the U.S. customs territory for consumption by an act or omission that is material and false and results in AD or CV duties being reduced or not applied to or collected on such goods. Examples of evasion include misrepresentation of the goods’ true country of origin (e.g., through fraudulent country of origin markings on the product itself or false sales), false or incorrect shipping and entry documentation, and misreporting of the goods’ physical characteristics.

The Enforce and Protect Act, which was included as Title IV in the Trade Facilitation and Trade Enforcement Act signed into law this past February, created a new framework for CBP to investigate evasion allegations. CBP is proposing to amend its regulations to implement this framework as follows.

Initiation. CBP must initiate an investigation within 15 business days of receiving a properly filed allegation by an interested party (which could be a competing importer) or request from another federal agency that reasonably suggests evasion. Each allegation may only concern one importer, although multiple allegations against one or more importers may be consolidated. A determination to initiate an investigation must be notified to all known parties within 95 days after initiation. Parties can request protection of confidential business information (e.g., trade secrets, production costs, customer lists).

Investigation. Investigations will be conducted by CBP’s Trade Remedy Law Enforcement Directorate. Each investigation will cover entries made within one year of receipt of the allegation or request, though CBP may investigate other entries at its discretion. This provision will not limit CBP’s authority to act under other statutory provisions with respect to information obtained during the investigation; e.g., the assessment of penalties under 19 USC 1592.

CBP may collect such information as is necessary to make a determination on the evasion allegation through any means authorized by law, though the primary sources are expected to be information from its own files, other federal agencies, field work by CBP officials, and questionnaires directed to importers, foreign producers and exporters, foreign governments, etc. CBP may conduct verifications of collected information in the U.S. or in foreign countries as necessary to make a determination. CBP may make an adverse inference if a respondent does not act to the best of its ability to provide the information requested (except in the case of foreign governments) or based on the allegation, other CBP investigations, proceedings or actions regarding evasion, or any other available information.

Interested parties must report to CBP any knowledge or reason to suspect that the covered goods may pose a health or safety risk to U.S. consumers, and CBP must report any such risk to the appropriate federal agencies.

Interim Measures. CBP must determine within 90 calendar days of initiation whether there is reasonable suspicion that covered goods were entered through evasion. If that determination is affirmative, CBP will (1) suspend liquidation of unliquidated entries of covered goods entered after the date of initiation, (2) extend the period for liquidating unliquidated entries of covered goods that entered before initiation, and (3) take any additional measures necessary to protect the revenue (e.g., requiring a single transaction bond or additional security or the posting of cash deposits).

Determination. CBP must determine within 300 calendar days (360 in extraordinarily complicated cases) whether there is substantial evidence of evasion and must communicate that determination to the accuser and accused within five business days after making a determination. CBP’s failure to make a determination by the deadline will not result in a deemed decision as to whether or not evasion has occurred.

Consequences. If its determination is affirmative, CBP must (1) suspend liquidation of unliquidated entries of covered goods that entered on or after the date of initiation, (2) extend the period for liquidating unliquidated entries of covered goods that entered before initiation, (3) notify the Department of Commerce and request that it identify the appropriate AD/CV duty rates, (4) require importers of covered goods to post cash deposits, (5) assess AD/CV duties on covered goods, and/or (6) take such additional enforcement measures it deems appropriate; e.g., modifying procedures for identifying future evasion, reliquidating entries as provided by law, and referring the matter to U.S. Immigration and Customs Enforcement for possible civil or criminal investigation.

If its determination is negative, CBP will cease applying any interim measures and liquidate the affected entries in the normal course.

Review. Evasion determinations are subject to administrative review that may be requested by any party to the investigation.

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