Antidumping and Countervailing Duty Evasion Investigations
In February of this year, the Trade Facilitation and Trade Enforcement Act of 2015 became law. Title IV of this law is the Prevention of Evasion of Antidumping and Countervailing Duty Orders, or the Enforce and Protect Act of 2015 for short.
The Enforce and Protect Act of 2015 and the regulations issued by U.S. Customs and Border Protection (CBP) set out procedures for interested parties to file an allegation with CBP when they suspect another party of evading antidumping or countervailing duties. These reports help CBP to identify potential evaders while allowing domestic producers of a product to be more involved in the enforcement proceedings.
CBP established a new investigatory group called the Trade Remedy Law Enforcement Directorate within the Office of Trade, or TRLED. When a party files an allegation, CBP will review entries filed up to one year prior to the date of the allegation. At its discretion, however, CBP may broaden this scope and review other entries as well. CBP’s discretion is a theme in these new regulations. The regulations are not a limitation on CBP at all. CBP may continue to utilize other avenues to investigate duty evasion as it sees fit.
The definitions of key terms under the Enforce and Protect Act of 2015 will likely be familiar as they track definitions used in antidumping and countervailing duty law.
An “allegation” is a filing with CBP by an interested party that alleges an act of evasion.
“Evasion” is defined as the “entry of covered merchandise [subject to an AD or CVD order] into the customs territory of the United States for consumption by means of any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties being reduced or not being applied with respect to the covered merchandise.”
An “interested party” refers either to a party associated with the domestic like product or a party related to the alleged evasion, including the foreign manufacturer, producer, or exporter, or any importer (not just importers of record) of covered merchandise. The phrase “parties to the investigation” is narrower and only refers to the party filing the allegation and the importer of covered merchandise or alleged evader. However, if a federal agency is the party filing an allegation of evasion, that federal agency is not kept notified of actions taken related to the investigation.
An interested party may file an allegation. Each allegation must be limited to one importer, but a single interested party may file multiple allegations. CBP may consolidate multiple allegations against one or more importers into a single investigation at any point prior to an evasion determination. Consolidation may depend upon relationships between the importers, similarity of covered merchandise, similarity of AD/CVD orders, and overlap in time periods for entries. The date on which CBP receives the first allegation is used to determine the deadlines for the consolidated action.
Agents who are not attorneys at law will need a power of attorney to file an allegation on behalf of their principal. Most trade-related powers of attorney currently being used will be insufficient because the language must specifically authorize such person to make, sign, and file the submission or grant unlimited authority to the agent.
Interested parties may request confidential treatment of their allegation, but the following data elements will never be considered confidential: the name of the party providing information and the party’s agent; how the party making the allegation qualifies as an interested party; the name and address of the importer/alleged evader; a description of covered merchandise; and the applicable AD/CVD orders
CBP is now required to decide whether to initiate an investigation within 15 business days of receipt of a properly filed allegation. If CBP decides not to initiate an investigation, CBP will notify the interested party within five business days of that determination. Receipt of the allegation by CBP starts the clock running, and CBP is subject to statutory deadlines that may not be extended.
If CBP requests information and the importer, foreign producer/exporter, or the party making the allegation fails to cooperate to the best of its ability, CBP may apply an inference adverse to that party, even if another party has provided the information requested by CBP. However, an adverse inference will not be applied against a foreign government.
If at any point after receipt of an allegation, CBP is uncertain whether the merchandise is within the scope of an AD/CVD order, CBP’s TRLED must refer the matter to the Department of Commerce. This action tolls CBP’s deadlines to either initiate an investigation or issue a determination as to evasion.
In addition to responses to CBP’s requests for information, parties to the investigation may submit factual information to support, negate, or clarify the allegation of evasion as long as it is within 200 calendar days from the beginning of the investigation. Rebuttals must be submitted in 10 calendar days. Similarly, written arguments may be submitted to CBP by day 230 and parties have 15 calendar days to submit a response to those written arguments.
No later than 90 calendar days after initiating an investigation, CBP will determine whether there is a reasonable suspicion of evasion, and if so, take interim measures such as suspending or extend the liquidation—the time when entry into the U.S. becomes final and duties are set—or
requiring a single transaction bond or additional security or the posting of a cash deposit.
If liquidation is suspended or extended, the entry will remain open until CBP decides whether the entry was within the scope of an antidumping or countervailing duty order and whether evasion took place.
Upon conclusion of the investigation, generally after 300 calendar days, CBP will determine whether there is substantial evidence of evasion. If CBP determines there is no evasion, CBP will suspend its interim measures and liquidate the entries in their normal course. If CBP determines there has been evasion, in addition to its liquidation actions, CBP will require the posting of cash deposits and assess duties on entries of covered merchandise.
Parties to the investigation may file a request for administrative review with the Office of Regulations and Rulings, in which case CBP will review the matter afresh. The final determination is subject to judicial review by the Court of International Trade.
In conclusion, while a party could file an allegation before, CBP was not obligated to notify the party about the status of the matter. Now CBP is bound by some statutory deadlines and some notice requirements as well.
Kim Carlson is a senior attorney in the international trade group at Gardere Wynne Sewell LLP, in Dallas.