New Duty Evasion Bill Would Create "Customer Rules" for CHBs, New Penalties, Etc.
On September 20, 2011, Senator McCaskill (D-MO) introduced S. 15811, a bill to address unfair trade practices such as duty evasion. The bill would create “know your customer” rules for customs brokers, implement improvements to the importer of record database, and permanently eliminate the AD “bonding-in-lieu” provision for new shippers.
Senator McCaskill states that she introduced the bill to “help make sure that the playing field is level, and to bring accountability to foreign companies who are gaming the system and putting our businesses at a disadvantage.”
Bill Focuses on Curbing Duty Evasion
According to a press release, S. 1581 builds on other proposals to curb duty evasion by focusing on two key issues that other bills have not addressed: that duty evaders are difficult to identify and locate (making it challenging for officials to crack down on those cheating), and that current law allows foreign companies that have not previously exported to the U.S. to post a bond to cover the duties they are estimated to owe, while other shippers are required to pay cash (the foreign companies often “disappear” before paying the fully assessed amount of the duties they owe).
Would Create New Requirements for Brokers, Require IOR Database Improvements, Etc.
According to the press release and the text of the bill, S. 1581 would address Senator McCaskill’s issues by:
Creating “know-your-customer” rules for customs brokers - require customs brokers to obtain identifying information from their clients, and make a good faith effort to verify that information. The information would then be available to law enforcement during an investigation, thereby increasing the likelihood the lawbreakers can be identified and brought to justice.
The bill would also create a safe harbor to shield brokers from fines if they make a good faith effort to comply; however as written, customs brokers that don't meet the safe harbor rules and that fail to collect the information required, could be liable for a monetary penalty up to $10,000 for each violation and revocation or suspension of their license or permit.
Importer of Record Database -- require the Secretary of Homeland Security to implement specified improvements to the importer of record (IOR) database by, among other things, (i) including a history of IOR numbers associated with each IOR, (ii) providing a system to evaluate the accuracy of the database with respect to each IOR, (iii) establishing a system that ensures duplicate IOR numbers are not issued, etc.
Permanently eliminating the “bonding-in-lieu” provision for new shippers - new foreign importers would have to pay the full estimate of AD duties owed on products they are importing at the time they initiate the import process. (Current law allows new shippers to post a bond for duties owed, rather than cash up front as all other shippers are required to do—something that is not necessary under U.S. trade agreements.)
1Fighting for American Industry’s Right (FAIR) to Enforcement Against Duty Evasion Act.
(See ITT’s Online Archives or 09/13/11 news, 11091333, for BP summary of CBP sources stating that importers that get new IOR numbers may get additional scrutiny from CBP officials.
See ITT’s Online Archives or 05/31/11 news, 11053124, for BP summary of another Senate bill to fight AD/CV duty evasion, the ENFORCE Act, introduced in May 2011 by Senator Wyden (D-OR).)
Senator McCaskill press release, with link to bill, available here