November 09, 2010

Wyden Staff Uncover Chinese Suppliers Looking to Subvert U.S. Trade Laws

Washington, D.C. To make the case for enhancing enforcement of existing U.S. trade laws, staff from U.S. Senator Ron Wyden’s Subcommittee on International Trade conducted an experiment to find out how easy it would be to find a Chinese supplier willing to engage in customs fraud to avoid paying U.S. anti-dumping and countervailing duties (AD/CVD).  Using a Gmail account to pose as a fictitious American company interested in importing Chinese products without paying U.S. duties, a single Wyden staffer spent a half hour a day emailing companies on one of China’s largest business to business e-commerce platforms.  After two weeks, the Wyden staffer had emails from ten different Chinese companies interested in committing fraud.

Through email correspondence, Chinese manufacturers of products subject to AD/CVD orders ranging from steel nails to diamond saw blades expressed interest in avoiding these orders. Some manufacturers volunteered methods for evading U.S. duties including changing the country-of-origin documents associated with the merchandise, rerouting goods through third countries, or in at least one case, undervaluing their product to lower the cost of the duties owed. The duties that are supposed to be paid on the merchandise involved in the staff inquiries are imposed to protect more than 120 domestic companies and 12,000 U.S. workers from unfairly traded imports.

“My staff’s unscientific experiment makes a very serious point: Chinese companies are not only committing customs fraud and costing the U.S Treasury in revenue, they aren’t afraid of getting caught,” said Wyden, who has authored legislation with U.S. Senator Olympia Snowe to force Customs to step up enforcement of U.S. trade laws.

Wyden staff released a report today detailing their experiment.  In addition, the report identifies dozens of other Chinese firms advertising – in English – services they provide to evade AD/CVD. The public version of the report does not include the names of the individuals and firms with which Wyden’s staff corresponded in the event that these individuals are of interest to law enforcement.  The un-redacted report was delivered to U.S. Customs and Border Protection.  To read the report click here.