United States: US Customs Issues New Regulations Allowing US Interested Parties To Initiate Investigations Into Importers Allegedly Evading Antidumping And Countervailing Duties

On August 22, 2016, US Customs and Border Protection (CBP) and the Department of the Treasury published a set of interim regulations setting forth new procedures for CBP to investigate claims of evasion of antidumping (AD) and countervailing duty (CVD) orders (the "duty evasion investigations.").1 The interim regulations seek to address a closely watched issue regarding US AD and CVD proceedings: Private parties that may benefit from the collection of AD or CV duties, including relevant US producers and competing importers, are now accorded their day in court, although the process starts with CBP.

On February 24, 2016, President Obama signed into law a new trade act that contains Title IV-Prevention of Evasion of AD and CVD Orders (EAPA).2 The interim regulations were required by section 421 of the EAPA. By way of background, lack of enforcement of AD and CVD orders is widely considered in the United States to be a serious endemic. In May 2012, the Government Accountability Office (GAO) issued a report titled "Management Enhancements Needed to Improve Efforts to Detect and Deter Duty Evasion." This report called for more robust CBP efforts to address AD and CVD order evasion and facilitate oversight of these efforts.3 Recently, in August 2016, another GAO report examined a related issue of non-payment risks associated with CBP's efforts to collect AD and CV duties,4 which quickly gathered the support of a critical federal lawmaker.5 It was against this backdrop that the new interim regulations targeting evasion of AD and CVD orders were issued.

The interim regulations now obligate CBP to investigate private duty evasion allegations that have reasonable factual support. This new mandate to act on private allegations does not take away the agency's traditional enforcement authority. Under pre-existing customs laws, CBP can take enforcement actions against an evasion of AD and CVD orders, which include the assessment of civil penalties against offending importers. In addition, a fraudulent scheme to evade AD duties has led to a criminal prosecution of the offending importer.6 However, AD and CV duty evasion allegations submitted by private parties prior to the implementation of the EAPA did not afford the complaining parties an opportunity to participate in a resultant investigation. Also, CBP used to have no obligation to notify the complaining parties of the outcome of the agency's investigation. Both above-mentioned problems have been addressed in the August 22 interim regulations. Meanwhile, the interim regulations made clear that CBP retains the authority to use information obtained during an EAPA investigation to impose penalties under its traditional civil enforcement tool (19 U.S.C. § 1592). 

The August 22 interim regulations provide for the definition of ''evade'' and ''evasion." In the current context, these terms refer to entering merchandise subject to a US AD or CVD order (the "covered merchandise") for consumption by means of any document or electronically transmitted data or information, written or oral statement or act that is material and false or to any omission that is material and that results in any cash deposit or other security or any amount of applicable AD or CV duties being reduced or not being applied. Hence, falsely reporting the country of origin or physical nature of the goods falls squarely within the ambit of the interim regulations. As to who may make a duty evasion complaint, US producers of a domestic like product are typically who allege wrongful importer actions to evade AD and CVD orders. The new interim regulations also give standing to importers of the covered merchandise who wish to bring evasion allegations against competing importers. These competing importers are included in the definition of "interested parties." A duty evasion investigation may also be requested by a federal agency, including the Department of Commerce or the United States International Trade Commission.

Regarding the new investigation procedures, generally CBP will decide whether a duty evasion investigation is warranted within 15 business days after the receipt of a properly filed allegation. If CBP decides to not initiate an investigation, the complainant will be informed within five business days of that determination. Conversely, CBP will notify all known parties to a duty evasion investigation no later than 95 calendar days after the initiation of the investigation. A CBP determination as to whether duty evasion occurred will be made within 300 calendar days from the date of initiation of the investigation, with a 60-day extension reserved for "extraordinarily complicated" investigations. The parties to the investigation will be notified within five business days of the initial determination by CBP. They also have up to 30 business days after the date of the initial determination to request an administrative review by Regulations and Rulings, Office of Trade, which is a branch of CBP. The final administrative determination issued thereby is subject to judicial review in accordance with section 421 of the EAPA.

In publishing the interim regulations, effective August 22, 2016, CBP also seeks public comments on their contents and requires that all comments be received by October 21, 2016. All parties concerned with a covered merchandise should take notice of the interim regulations bringing private AD and CV duty evasion allegations into the process. Opportunities and risks coexist as CBP tees up its efforts to strengthen the enforcement of AD and CVD orders. The clock is already ticking on taking advantage of the public comment period.

Footnotes

1 Investigation of Claims of Evasion of Antidumping and Countervailing Duties, 81 Fed. Reg. 56477 (Aug. 22, 2016).
2 Pub. L. 114– 125, 130 Stat. 122, 155 (Feb. 24, 2016); 19 U.S.C. 4301 note.
3 GAO, Management Enhancements Needed to Improve Efforts to Detect and Deter Duty Evasion (May 2012, available at http://www.gao.gov/assets/600/590917.pdf.
4 GAO, CBP Action Needed to Reduce Duty Processing Errors and Mitigate Nonpayment Risk (Jul. 2016), available at http://www.gao.gov/assets/680/678419.pdf.
5 House Ways and Means Chairman Kevin Brady (R-TX), Brady Statement on GAO Report on Antidumping and Countervailing Duty Collections (Aug. 15, 2016) (press release), available at http://waysandmeans.house.gov/brady-statement-gao-report-antidumping-countervailing-duty-collections.
6 Mayer Brown Legal Update, The Continuing US Trend to Criminalize Customs Violations (Oct. 30, 2012), available at https://www.mayerbrown.com/The-Continuing-US-Trend-to-Criminalize-Customs-Violations-10-30-2012.

Originally published on August 24, 2016

Learn more about our International Trade and Government Relations practices.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.