August 05, 2010

Senate Trade Leaders Propose Legislation to Combat Evasion of U.S. Trade Laws

Gives the U.S. Department of Commerce New Tools to Enforce Trade Remedy Laws; Provides More Accountability for U.S. Producers

Washington, D.C. In an effort to make it more difficult for foreign exporters to circumvent U.S. trade laws, U.S. Senators Ron Wyden (D-Ore.) and Olympia J. Snowe (R- Maine) introduced a major legislative initiative today that will give the U.S. Department of Commerce (DoC) both a mandate and additional tools to enforce U.S. trade remedy laws, specifically those related to anti-dumping and countervailing duties (AD/CVD).

Exporters from developing countries like China have been known to mislabel shipments and reroute goods through third-party countries in an effort to fool customs officials and circumvent U.S. laws designed to promote free and fair trade.  The surging number of imports from these countries is making it harder and harder for customs officials to identify cheaters and enforce laws.   The Enforcing Orders and Reducing Circumvention and Evasion (ENFORCE) Act will expand DoC’s powers, and require a uniform, rapid-response to allegations of evasion of U.S. trade laws by the DoC and U.S. Customs and Border Protection (CBP).  

“The ENFORCE Act would dramatically improve the enforcement of U.S. trade laws designed to create a level playing field for U.S. producers,”  said Wyden, who chairs the International Trade Subcommittee of the Senate Committee on Finance.  He added, “If the government is serious about helping American businesses grow and create jobs, it must ensure that U.S. trade laws are enforced and duties are paid.  The ENFORCE Act is going to unleash the resources of the U.S. Department of Commerce to investigate evasion of U.S. trade laws and ensure that the correct trade remedy duties are applied at the border.”  

“Most companies play by the rules, but when certain unscrupulous foreign exporters invent schemes to avoid paying duties it puts American workers at a disadvantage and bilks our government out of millions of dollars in uncollected fees,” said Snowe, a senior Member of the Senate Committee on Finance.  “Our bill seeks to strengthen the process of investigation between Commerce and Customs to combat evasion and ensure we are enforcing the trade remedy statutes that are currently on the books.”

Currently, domestic producers may petition the U.S. Department of Commerce (DoC) to investigate imports that are believed to be sold at less than normal value (dumped) or unfairly benefit from government subsidies.  If the U.S. government finds that these imports are dumped or subsidized to a degree that causes harm to U.S. producers, the DoC applies antidumping (AD) duties in the case of dumped imports, and countervailing duties (CVD) in the case of subsidized imports.  AD/CVD “orders” are the primary means by which the U.S. combats unfair trade in merchandise.  These trade “remedy” laws are only effective to the extent they are enforced, and importers are increasingly devising schemes to avoid paying AD/CV duties.  Although the DoC initially imposes the AD/CV duties, it is currently unable to investigate whether importers are circumventing them.  

The Enforcing Orders and Reducing Circumvention and Evasion (ENFORCE) Act of 2010 is designed to combat the evasion of AD/CVD orders and enforce the trade remedy statutes that are currently on the books.  The ENFORCE Act would do the following:

·        Empower the DoC to investigate evasion of trade remedy laws. Currently, U.S. Customs and Border Protection (Customs) is empowered to investigate allegations of evasion and enforce AD/CVD orders.  The broad scope of Customs’ mission leads many to believe that is too slow in identifying and responding to AD/CVD evasion in a way that is helpful to domestic producers.  Empowering the DoC to investigate the evasion of an AD/CVD order, which the DoC imposed in the first place, is a common-sense strategy to combat unfair trade practices.  The ENFORCE Act would not diminish Customs’ role; rather, it would bolster greater cooperation and information sharing between the two agencies to combat unfair trade practices that hurt U.S. manufacturing and employment.

·        Establish a rapid-response timeline by which the DoC and Customs would respond to allegations of evasion.  The ENFORCE Act would give the U.S. government 60 days, after an allegation of evasion is put forward, to determine whether there is a reasonable basis to believe an importer is evading an AD/CVD order.  If an affirmative preliminary determination is made, the ENFORCE Act would require that AD/CV duties be collected in cash until the investigation is concluded.
·        Improve the safety of imports.  Many of the same schemes that importers employ to evade an AD/CVD order, like mislabeling, often shirk regimes the U.S. has in place to ensure that products are safe for consumption.  The ENFORCE Act would authorize information sharing among the appropriate agencies when the government determines that an importer may be attempting to evade an AD/CVD order.

The ENFORCE Act enjoys the support of various trade and industry groups including the American Honey Producers Association, the Coalition for Enforcement of Anti-dumping and Countervailing Duty Orders, and the Committee to Support U.S. Trade Law.