New AD/CV Duty Evasion Enforcement Could Spell Trouble for Importers

OCEANAIR is cautioning importers take the initial steps to avoid getting caught up in the expanded powers of U.S. Customs and Border Protection (CBP), especially in regards to the new procedures to contest the evasion of antidumping and countervailing duties (AD/CV). Congress recently authorized CBP to improve trade enforcement practices and the agency responded by increasing its efforts in the realm of AD/CV duties.

AD/CV duties evasion occurs when a business or individual misrepresents the country of origin or submits false shipping and entry documentation. While preventing and addressing evasion of these duties was always a priority for the agency, new developments are empowering CBP regarding AD/CV duties, which can potentially increase liability for importers.

The first was a legislative change earlier this year to the Trade Facilitation and Trade Enforcement Act through the Enforce and Protect Act (EAPA). The enactment of this legislation provided CBP with a significant expansion in authority to identify and disrupt the delivery channels of imported goods which seek to elude AD/CV duties.

As a result of this new mandate, the agency expected to see an increase in penalty cases. However, another development illustrates the pains CBP still continues to face concerning improving performance and collecting fees. The August 2016 Government Accountability Report stated the agency failed to collect over $2 billion in AD/CV duties over the last fifteen years.

In response to the report and to meet the legislative agenda, CBP began to implement a formal process to investigate AD/CV duty evasion accusations authorized through the EAPA. With these new practices, CBP now has lower standards to begin an investigation and any federal agency, or any interested party, or a competing import firm can quickly submit an allegation against an importer. As a result, CBP has enough power to halt a supply chain within ninety-days and could even impose further criminal or civil investigations.

One of the steps an importer can take to circumvent getting caught in this aggressive CBP web is to administer internal reviews to validate the classification and origin of their goods. It is also advisable for them to self-disclose any problems discovered through those reviews to CBP.

For further questions or assistance, please contact OCEANAIR compliance at (781) 286-2700 or