The Trump Administration has made tariffs a focal point of America's trade policy landscape. These tariffs impose duties owed on imports into the United States, with the amount owed depending on several factors such as the value of the goods, their classification, and the country of origin of the goods. It is widely expected that the U.S. government will be increasing enforcement actions to prevent unlawful practices in attempts to avoid paying tariffs.
To address the issue of duty evasion, there are several avenues of relief available for companies willing to act as whistleblowers in reporting such violations. First, the Enforce and Protect Act (EAPA) establishes procedures for parties to file claims with U.S. Customs and Border Protection (CBP) alleging that importers have evaded antidumping (AD) or countervailing duties (CVD) on imported goods.1 Importantly, EAPA allegations are only available where a final antidumping and/or countervailing duty order is in effect. After an EAPA allegation is initiated, CBP will investigate the importer and the foreign manufacturer/exporter to determine whether evasion has occurred.
Where EAPA allegations are not available, parties may file e-Allegation claims with CBP to report other forms of suspected trade violations.2 These claims may include allegations that a party is evading payment of non-AD/CVD duties, such as Section 301 or Section 232 duties, through misclassification, false country of origin, or other improper means. Similar to filing an EAPA allegation, an e-Allegation is filed with supporting information and documentation, including the U.S. law being violated, the information of the party violating U.S. law, the type of trade violation involved, and any documentation that is appropriate to support the claim. If CBP finds that the party is not adhering to U.S. law and engaging in unfair trade practices, CBP may require the evading party to pay the avoided tariffs/duties and may potentially impose penalties as well.
In conjunction with an EAPA or e-Allegation filed with CBP, a Moiety Claim may also be filed with CBP.3 A Moiety Claim is a request for a portion of the proceeds from a successful recovery of funds or assets due to information provided about customs fraud or violations of customs laws. The whistleblower award is limited to 25 percent of the net recovery by CBP, not to exceed $250,000.
Another option for companies that are aware of a competitor's potential evasion of duties is a "reverse False Claims Act" claim. Under the reverse false claims provision of the False Claims Act (FCA), liability can attach for either knowingly concealing, avoiding or decreasing an obligation to pay the government, or knowingly creating or using (or causing another to create or use) a false record material to an obligation to pay the government. The reverse false claims provision can be used by a private party when a competitor submits false records or statements to reduce or conceal a fixed duty to pay money owed to the Government. These qui tam lawsuits allow private citizens to sue on behalf of the government and enable the whistleblower to collect 10 to 30 percent of the government's recovery as an award. Further, the Ninth Circuit recently ruled that while False Claims Act cases overlap with Moiety Claim cases, that does not prevent False Claims Acts awards being provided to whistleblowers of customs fraud.4
Footnotes
1. Enforce and Protect Act, Pub. L. 114-125, 130 Stat. 122, 155, Feb. 24, 2016) (19 U.S.C. 4301 note).
2. See e-Allegations Program, CBP Website, https://www.cbp.gov/trade/e-allegations.
3. See 19 U.S. Code § 1619; see also 19 CFR 161.16.
4. Island Industries v. Sigma Corp., 9th Cir. # 22-55063
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