A closely watched case at the U.S. Court of International Trade (CIT) has resulted in a big victory for U.S. Customs & Border Protection (CBP) and for U.S. companies that avail themselves of the U.S. trade remedies laws.
The case involved a challenge to CBP’s authority to require single transaction bonds (STBs) for goods subject to antidumping and countervailing duties. One of CBP’s continuing headaches has been small, undercapitalized importers that bring in goods subject to trade remedies duties, and then declare bankruptcy or disappear when CBP presents the final bill.
All importers must have a bond on file with Customs, which Customs can draw upon should the importer skip out on duties. Most importers operate under “continuous” bonds which are underwritten in amounts based on the importer’s past shipments. However, when an importer starts bringing in goods subject to trade remedies orders, with their high and shifting duties, those bonds may no longer be sufficient to make the Government whole should the importer default.
Consequently, rather than continue to allow importers of certain high-risk goods subject to trade remedies orders under continuous bonds , CBP has recently turned to STBs, requiring certain importers – particularly those with dubious paperwork – to post bonds in amounts equal to the highest potential duties that could be levied under a particular trade order.
Here, CBP required STBs of an importer of Chinese garlic, where CBP could not verify the producer (and thus, the applicable antidumping duty rate). The importer challenged CBP’s authority at the CIT, and initially scored a victory in the form of a temporary restraining order. However, upon reviewing the case on the merits, the CIT found that CBP:
- Has the authority under the law to determine that an importer’s bonding is insufficient and to require STBs.
- Does not usurp the Department of Commerce’s authority to determine the specific antidumping and countervailing duty rates applicable to various producers when it requires STBs equal to the highest potential duties under specific orders.
- Did not act arbitrarily and capriciously in requiring STBs of this particular importer, given inconsistencies in the importer’s paperwork that prevented CBP from verifying the producer of the merchandise.
This case affirms CBP’s right to use STBs to curb evasion of antidumping and countervailing duties, by ensuring sufficient bonding to make the Government whole. This is good news both for the U.S. Treasury, and for U.S. manufacturers that have fought long and hard to obtain trade relief from dumped and subsidized imports.