On August 15, 2016, the United States Government Accountability Office (GAO) released a report finding that there are $2.3 billion in uncollected antidumping and countervailing duties (AD/CVD) that U.S. Customs and Border Protection (CBP) has yet to receive. GAO examined data for entries from 2001 through 2014, and the amount owed on these entries through May 12, 2015.
After Commerce issues AD/CVD orders, CBP collects initial estimated duties at importation on entries of the products covered by the orders. A final duty rate is calculated after the first year, either automatically or through an annual administrative review. CBP then instructs ports to apply the final rate and calculate final duties, issuing bills if a final rate is higher than the initial estimated rate. While most importers are required to post a customs bond to secure their financial obligations to the U.S. government, and CBP has other enforcement measures in place, as of May 12, 2015, according to GAO’s report, CBP has yet to receive $2.3 billion on entries from 2001 to 2014 that are subject to AD/CVD orders.
GAO estimates that the CBP has only collected about 31 percent of the total value of AD/CVD bills issued on entries from 2001 through 2014. The uncollected $2.3 billion mostly reflect unpaid antidumping duties, and debts tied primarily to six products: fresh garlic, wooden bedroom furniture, crawfish tail meat, honey, and pure magnesium. Further, Chinese companies owe most of this unpaid amount – about 95 percent, i.e., $2.2 billion out of $2.3 billion.
Despite GAO’s assessment of the problem, CBP reportedly estimates that $1.6 billion of this debt are likely uncollectible, even once all current CBP measures are exhausted. In its report, GAO recommends that CBP issue guidance and collect data on liquidation errors, conduct risk analyses, and take other steps to strategically mitigate AD/CVD duty nonpayment. CBP has agreed to implement these recommendations and estimates that it will finish fulfilling them by mid-September 2017.
Yet there are other options available for CBP to promptly mitigate and eventually eliminate nonpayment. Given CBP’s centralization of the management of single transaction bonds, the agency should harness these bonds as tools to allow CBP to protect against nonpayment on an entry-specific and full-value basis. Another option is to require non-resident importers to have assets in the United States on which CBP can collect duties owed. CBP should also take special steps to ensure that it can collect when bond amounts are not enough to cover AD/CVD duties owed. In addition, CBP should boost its efforts to require more information from importers of record. Without more importer information upfront, CBP could lose on the opportunity to pursue a delinquent importer who later imports under a new name. To effectively do so, CBP should reconsider its decision – as noted in the report – against revising its regulations on the information requirement, and should also begin to consistently and routinely reject forms with incomplete information.
At stake is the continuation of domestic industries that are significantly impacted by below-cost and subsidized imports. Without the firm enforcement of the payment AD/CVD duties, the ability of U.S. AD/CVD law to actually level the playing field against unfair foreign competition is faint. CBP must act on its legal authority as soon as possible, recover this significant lost revenue, and ensure the effectiveness of AD/CVD law through the rigorous enforcement of the payment of duties.