Importers Preparing for Tougher CBP Enforcement of AD/CV Duty Evasion
Preventing and addressing the evasion of AD/CV duties (e.g., the misrepresentation of country of origin or submission of false shipping and entry documentation) has always been a priority for CBP, but two recent developments have prompted the agency to redouble its efforts. One was the enactment earlier this year of the Enforce and Protect Act as part of the Trade Facilitation and Trade Enforcement Act, which gave CBP a significantly expanded role and the authorities to match. Commissioner R. Gil Kerlikowske has said CBP has had increasing success in identifying and disrupting distribution channels of imported goods that seek to evade AD/CV duties and expects to see an increase in penalty cases as a result of its new authorities. The other development was an August 2016 Government Accountability Report concluding that CBP failed to collect about $2.3 billion in AD/CV duties over the past 15 years and highlighting the problems CBP has faced and continues to face in trying to improve its performance.
CBP recently issued regulations setting out the formal process it will use to act on its new authority under the EAPA to investigate allegations of AD/CV duty evasion. This rule allows any interested party, including competing importers and federal agencies, to submit such allegations and sets a fairly low bar for CBP to launch an investigation. CBP has broad authority to conduct these investigations and can impose initial remedial measures that could interrupt a supply chain in as little as 90 days. Any final determination of evasion may be met with not only AD/CV duties but also other enforcement measures such as civil or criminal investigations.
Many importers are beginning to take steps to avoid getting caught in CBP’s expanded dragnet. ST&R’s Larry Ordet was cited in a recent American Shipper article as saying importers should conduct internal reviews to verify the classification and origin of their goods and would be well-advised to self-disclose to CBP any problems those reviews reveal. Importers also have until Oct. 21 to raise any specific concerns about the investigation process or timeline set out in CBP’s interim regulations.