CBP Set to Strengthen Enforcement of Antidumping and Countervailing Duty Evasion

August 3, 2011

Recent hearings before a U. S. Senate subcommittee have indicated that U. S. Customs and Border Protection (CBP) intends to more vigorously pursue the evasion of antidumping (AD) and countervailing (CV) duties on imported merchandise. The areas that CBP may review for possible evasion would include, among others, intentional undervaluation, review of volume of imports from exporters assigned a low AD/CV rate, the illegal transshipment of merchandise to deceive as to the actual country of origin, misclassification, the use of shell companies, improperly engineering products to fall outside the scope of an order, using loopholes associated with the administrative review process, outright smuggling, and importing knock-down assemblies and thereafter assembling the finished product in the U. S.

Despite seemingly impressive statistics presented by an official from the U. S. Immigration and Customs Enforcement (ICE) at the hearing, Senate Finance Subcommittee Chairman (Ron Wyden, D-Ore.) was very critical of CBP’s efforts to stem the evasion of AD/CV duties. He alleged that CBP does not follow up on evasion issues and that it takes CBP a long time to conclude its investigations. Senator Wyden has re-introduced legislation to improve the tools available to Federal agencies to prevent the evasion of AD/CV duties. Last year, different versions were presented in each the House and Senate. In H.R. 6549, authority would have been transferred from the U. S. Department of Commerce to CBP to investigate claims that foreign manufacturers are evading AD or CV duty orders. In the Senate bill introduced last year, S. 3725, more authority would have been given to Commerce to investigate AD/CV evasions. 

The bottom line is that we expect CBP to more aggressively pursue avoidance or evasion of AD/CV duties in the areas listed above. This will also probably mean more penalty actions under 19 U.S.C. § 1592, the Customs civil fraud statute, in the coming year. Additionally, Senator Wyden and other Congressional representatives are introducing legislation to ensure CBP and Commerce are more aggressively pursuing the evasion of AD/CV duties.

Chinese manufacturers, in particular, have figured out ways to circumvent antidumping duties. For example, some Chinese suppliers, who do not have a specific lower rate, will ship their goods through factories which have been assigned lower duty rates, paying those factories a commission or fee for the service. 

Another increasingly common occurrence is that some factories transship goods to other countries or ports by changing or falsifying the bills of lading on the goods. Sometimes Chinese suppliers advertise AD/CV duty evasions on their websites. One Chinese-based company has stated on its website: “Trans-shipment may be the best way at present. Now we will show you how it helps you to avoid antidumping and how it reduces your costs.”

Another Chinese shipping agent stated verbatim the following:

First, we will ship the goods to the Singapore or Malaysia, we have some partner in there, they will help us do every documents . . . Second, we will change the container, and then we’ll order your country shipment, it can avoid the high duty. This is the only way to avoid the antidumping.

In summary, those who import goods that are subject to AD/CV duties can expect greater scrutiny by CBP of their entries.

If you have any questions about these or other customs issues, please contact Steve Spraitzar at steve.spraitzar@tuttlelaw.com or at (415) 288‑0427.

Stephen S. Spraitzar is an attorney with the Law Offices of George R. Tuttle in San Francisco.


The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright © 2011 by Tuttle Law Offices. 

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